Correlation Between Tait Marketing and Tai Tung

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

By analyzing existing cross correlation between Tait Marketing Distribution and Tai Tung Communication, you can compare the effects of market volatilities on Tait Marketing and Tai Tung 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 Tait Marketing with a short position of Tai Tung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tait Marketing and Tai Tung.

Diversification Opportunities for Tait Marketing and Tai Tung

-0.64

Correlation Coefficient

Tait Marketing  Tai Tung

Excellent diversification

The 3 months correlation between Tait and Tai is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tait Marketing Distribution and Tai Tung Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tai Tung Communication and Tait Marketing 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 Tait Marketing Distribution are associated (or correlated) with Tai Tung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tai Tung Communication has no effect on the direction of Tait Marketing i.e., Tait Marketing and Tai Tung go up and down completely randomly.

Pair Corralation between Tait Marketing and Tai Tung

Assuming the 90 days trading horizon Tait Marketing Distribution is not expected to generate positive returns. However, Tait Marketing Distribution is 3.26 times less risky than Tai Tung. It waists most of its returns potential to compensate for thr risk taken. Tai Tung is generating about -0.13 per unit of risk. If you would invest  3,975  in Tait Marketing Distribution on October 15, 2024 and sell it today you would lose (5.00) from holding Tait Marketing Distribution or give up 0.13% of portfolio value over 90 days.

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

Tait Marketing Distribution  vs.  Tai Tung Communication

Tait Marketing Distr

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tai Tung Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tai Tung Communication has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Tait Marketing and Tai Tung

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

The idea behind Tait Marketing Distribution and Tai Tung Communication 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.