Correlation Between Nien Hsing and Ta Jiang

Can any of the company-specific risk be diversified away by investing in both Nien Hsing and Ta Jiang 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 Nien Hsing and Ta Jiang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nien Hsing Textile and Ta Jiang Co, you can compare the effects of market volatilities on Nien Hsing and Ta Jiang 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 Nien Hsing with a short position of Ta Jiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nien Hsing and Ta Jiang.

Diversification Opportunities for Nien Hsing and Ta Jiang

0.43

Correlation Coefficient

Nien Hsing  Ta Jiang

Very weak diversification

The 3 months correlation between Nien and 1453 is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nien Hsing Textile and Ta Jiang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Jiang and Nien Hsing 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 Nien Hsing Textile are associated (or correlated) with Ta Jiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Jiang has no effect on the direction of Nien Hsing i.e., Nien Hsing and Ta Jiang go up and down completely randomly.

Pair Corralation between Nien Hsing and Ta Jiang

Assuming the 90 days trading horizon Nien Hsing Textile is expected to under-perform the Ta Jiang. But the stock apears to be less risky and, when comparing its historical volatility, Nien Hsing Textile is 2.91 times less risky than Ta Jiang. The stock trades about -0.02 of its potential returns per unit of risk. The Ta Jiang Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Ta Jiang Co on October 26, 2024 and sell it today you would lose (250.00) from holding Ta Jiang Co or give up 15.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Nien Hsing Textile  vs.  Ta Jiang Co

Nien Hsing Textile

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ta Jiang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ta Jiang Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nien Hsing and Ta Jiang

The main advantage of trading using opposite Nien Hsing and Ta Jiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nien Hsing position performs unexpectedly, Ta Jiang 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 Ta Jiang will offset losses from the drop in Ta Jiang's long position.

The idea behind Nien Hsing Textile and Ta Jiang 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.