Correlation Between Tainet Communication and Newretail

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

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

Diversification Opportunities for Tainet Communication and Newretail

-0.71

Correlation Coefficient

Tainet Communication  Newretail

Pay attention - limited upside

The 3 months correlation between Tainet and Newretail is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Tainet Communication System and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail and Tainet Communication 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 Tainet Communication System are associated (or correlated) with Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Tainet Communication i.e., Tainet Communication and Newretail go up and down completely randomly.

Pair Corralation between Tainet Communication and Newretail

Assuming the 90 days trading horizon Tainet Communication System is expected to generate 0.65 times more return on investment than Newretail. However, Tainet Communication System is 1.53 times less risky than Newretail. It trades about 0.05 of its potential returns per unit of risk. Newretail Co is currently generating about 0.03 per unit of risk. If you would invest  5,050  in Tainet Communication System on September 19, 2024 and sell it today you would earn a total of  2,940  from holding Tainet Communication System or generate 58.22% return on investment over 90 days.

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

Tainet Communication System  vs.  Newretail Co

Tainet Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tainet Communication System 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.

Newretail

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Tainet Communication and Newretail

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

The idea behind Tainet Communication System and Newretail 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.