Correlation Between Taisun Enterprise and Oceanic Beverages

Can any of the company-specific risk be diversified away by investing in both Taisun Enterprise and Oceanic Beverages at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Taisun Enterprise and Oceanic Beverages into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taisun Enterprise Co and Oceanic Beverages Co, you can compare the effects of market volatilities on Taisun Enterprise and Oceanic Beverages and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Taisun Enterprise with a short position of Oceanic Beverages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taisun Enterprise and Oceanic Beverages.

Diversification Opportunities for Taisun Enterprise and Oceanic Beverages

-0.09

Correlation Coefficient

Taisun Enterprise  Oceanic Beverages

Good diversification

The 3 months correlation between Taisun and Oceanic is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Taisun Enterprise Co and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages and Taisun Enterprise is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Taisun Enterprise Co are associated (or correlated) with Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Taisun Enterprise i.e., Taisun Enterprise and Oceanic Beverages go up and down completely randomly.

Pair Corralation between Taisun Enterprise and Oceanic Beverages

Assuming the 90 days trading horizon Taisun Enterprise Co is expected to under-perform the Oceanic Beverages. But the stock apears to be less risky and, when comparing its historical volatility, Taisun Enterprise Co is 1.91 times less risky than Oceanic Beverages. The stock trades about -0.06 of its potential returns per unit of risk. The Oceanic Beverages Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  715.00  in Oceanic Beverages Co on September 5, 2024 and sell it today you would earn a total of  480.00  from holding Oceanic Beverages Co or generate 67.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Taisun Enterprise Co  vs.  Oceanic Beverages Co

Taisun Enterprise

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taisun Enterprise Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Taisun Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Oceanic Beverages

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Oceanic Beverages Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Oceanic Beverages is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Taisun Enterprise and Oceanic Beverages

The main advantage of trading using opposite Taisun Enterprise and Oceanic Beverages positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taisun Enterprise position performs unexpectedly, Oceanic Beverages can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Oceanic Beverages will offset losses from the drop in Oceanic Beverages' long position.

The idea behind Taisun Enterprise Co and Oceanic Beverages Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.