Correlation Between Materials Analysis and Taitien Electronics

Can any of the company-specific risk be diversified away by investing in both Materials Analysis and Taitien Electronics 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 Materials Analysis and Taitien Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Materials Analysis and Taitien Electronics

0.65

Correlation Coefficient

Materials Analysis  Taitien Electronics

Poor diversification

The 3 months correlation between Materials and Taitien is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Materials Analysis Technology and Taitien Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taitien Electronics and Materials Analysis 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 Materials Analysis Technology are associated (or correlated) with Taitien Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taitien Electronics has no effect on the direction of Materials Analysis i.e., Materials Analysis and Taitien Electronics go up and down completely randomly.

Pair Corralation between Materials Analysis and Taitien Electronics

Assuming the 90 days trading horizon Materials Analysis Technology is expected to generate 1.21 times more return on investment than Taitien Electronics. However, Materials Analysis is 1.21 times more volatile than Taitien Electronics Co. It trades about 0.05 of its potential returns per unit of risk. Taitien Electronics Co is currently generating about -0.04 per unit of risk. If you would invest  15,380  in Materials Analysis Technology on October 26, 2024 and sell it today you would earn a total of  9,320  from holding Materials Analysis Technology or generate 60.6% return on investment over 90 days.

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

Materials Analysis Technology  vs.  Taitien Electronics Co

Materials Analysis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Analysis Technology 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.

Taitien Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taitien Electronics 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 Materials Analysis and Taitien Electronics

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

The idea behind Materials Analysis Technology and Taitien Electronics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.