Correlation Between Bright Led and Tainergy Tech

Can any of the company-specific risk be diversified away by investing in both Bright Led and Tainergy Tech 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 Bright Led and Tainergy Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bright Led Electronics and Tainergy Tech Co, you can compare the effects of market volatilities on Bright Led and Tainergy Tech 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 Bright Led with a short position of Tainergy Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Led and Tainergy Tech.

Diversification Opportunities for Bright Led and Tainergy Tech

0.34

Correlation Coefficient

Bright Led  Tainergy Tech

Weak diversification

The 3 months correlation between Bright and Tainergy is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bright Led Electronics and Tainergy Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tainergy Tech and Bright Led 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 Bright Led Electronics are associated (or correlated) with Tainergy Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tainergy Tech has no effect on the direction of Bright Led i.e., Bright Led and Tainergy Tech go up and down completely randomly.

Pair Corralation between Bright Led and Tainergy Tech

Assuming the 90 days trading horizon Bright Led Electronics is expected to under-perform the Tainergy Tech. But the stock apears to be less risky and, when comparing its historical volatility, Bright Led Electronics is 1.1 times less risky than Tainergy Tech. The stock trades about -0.08 of its potential returns per unit of risk. The Tainergy Tech Co is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,360  in Tainergy Tech Co on December 30, 2024 and sell it today you would lose (140.00) from holding Tainergy Tech Co or give up 10.29% of portfolio value over 90 days.

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

Bright Led Electronics  vs.  Tainergy Tech Co

Bright Led Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bright Led Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Tainergy Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tainergy Tech Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Bright Led and Tainergy Tech

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

The idea behind Bright Led Electronics and Tainergy Tech 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.