Correlation Between Arax Holdings and Taoping

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

By analyzing existing cross correlation between Arax Holdings Corp and Taoping, you can compare the effects of market volatilities on Arax Holdings and Taoping 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 Arax Holdings with a short position of Taoping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arax Holdings and Taoping.

Diversification Opportunities for Arax Holdings and Taoping

0.62

Correlation Coefficient

Arax Holdings  Taoping

Poor diversification

The 3 months correlation between Arax and Taoping is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Arax Holdings Corp and Taoping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taoping and Arax Holdings 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 Arax Holdings Corp are associated (or correlated) with Taoping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taoping has no effect on the direction of Arax Holdings i.e., Arax Holdings and Taoping go up and down completely randomly.

Pair Corralation between Arax Holdings and Taoping

Given the investment horizon of 90 days Arax Holdings Corp is expected to under-perform the Taoping. But the pink sheet apears to be less risky and, when comparing its historical volatility, Arax Holdings Corp is 1.25 times less risky than Taoping. The pink sheet trades about -0.2 of its potential returns per unit of risk. The Taoping is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Taoping on September 15, 2024 and sell it today you would lose (26.00) from holding Taoping or give up 44.83% of portfolio value over 90 days.

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

Arax Holdings Corp  vs.  Taoping

Arax Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arax Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Taoping

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taoping has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Arax Holdings and Taoping

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

The idea behind Arax Holdings Corp and Taoping 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.