Correlation Between Tachan Securities and Nan Liu

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

By analyzing existing cross correlation between Tachan Securities Co and Nan Liu Enterprise, you can compare the effects of market volatilities on Tachan Securities and Nan Liu 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 Tachan Securities with a short position of Nan Liu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tachan Securities and Nan Liu.

Diversification Opportunities for Tachan Securities and Nan Liu

-0.07

Correlation Coefficient

Tachan Securities  Nan Liu

Good diversification

The 3 months correlation between Tachan and Nan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Tachan Securities Co and Nan Liu Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Liu Enterprise and Tachan Securities 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 Tachan Securities Co are associated (or correlated) with Nan Liu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Liu Enterprise has no effect on the direction of Tachan Securities i.e., Tachan Securities and Nan Liu go up and down completely randomly.

Pair Corralation between Tachan Securities and Nan Liu

Assuming the 90 days trading horizon Tachan Securities Co is expected to generate 0.44 times more return on investment than Nan Liu. However, Tachan Securities Co is 2.29 times less risky than Nan Liu. It trades about 0.08 of its potential returns per unit of risk. Nan Liu Enterprise is currently generating about -0.08 per unit of risk. If you would invest  1,830  in Tachan Securities Co on December 29, 2024 and sell it today you would earn a total of  50.00  from holding Tachan Securities Co or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Tachan Securities Co  vs.  Nan Liu Enterprise

Tachan Securities

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tachan Securities Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tachan Securities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nan Liu Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nan Liu Enterprise 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 Tachan Securities and Nan Liu

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

The idea behind Tachan Securities Co and Nan Liu Enterprise 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.