Correlation Between LARGAN Precision and Ta Jiang

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

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

Diversification Opportunities for LARGAN Precision and Ta Jiang

-0.83

Correlation Coefficient

LARGAN Precision  Ta Jiang

Pay attention - limited upside

The 3 months correlation between LARGAN and 1453 is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding LARGAN Precision Co and Ta Jiang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Jiang and LARGAN Precision 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 LARGAN Precision Co 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 LARGAN Precision i.e., LARGAN Precision and Ta Jiang go up and down completely randomly.

Pair Corralation between LARGAN Precision and Ta Jiang

Assuming the 90 days trading horizon LARGAN Precision Co is expected to generate 1.27 times more return on investment than Ta Jiang. However, LARGAN Precision is 1.27 times more volatile than Ta Jiang Co. It trades about 0.15 of its potential returns per unit of risk. Ta Jiang Co is currently generating about -0.2 per unit of risk. If you would invest  233,000  in LARGAN Precision Co on October 27, 2024 and sell it today you would earn a total of  42,000  from holding LARGAN Precision Co or generate 18.03% return on investment over 90 days.

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

LARGAN Precision Co  vs.  Ta Jiang Co

LARGAN Precision

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LARGAN Precision Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LARGAN Precision showed solid returns over the last few months and may actually be approaching a breakup point.

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 LARGAN Precision and Ta Jiang

The main advantage of trading using opposite LARGAN Precision and Ta Jiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LARGAN Precision 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 LARGAN Precision Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.