Correlation Between Taseco Air and BaoMinh Insurance

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Can any of the company-specific risk be diversified away by investing in both Taseco Air and BaoMinh Insurance 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 Taseco Air and BaoMinh Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Taseco Air Services and BaoMinh Insurance Corp, you can compare the effects of market volatilities on Taseco Air and BaoMinh Insurance 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 Taseco Air with a short position of BaoMinh Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taseco Air and BaoMinh Insurance.

Diversification Opportunities for Taseco Air and BaoMinh Insurance

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Taseco and BaoMinh is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Taseco Air Services and BaoMinh Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BaoMinh Insurance Corp and Taseco Air 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 Taseco Air Services are associated (or correlated) with BaoMinh Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BaoMinh Insurance Corp has no effect on the direction of Taseco Air i.e., Taseco Air and BaoMinh Insurance go up and down completely randomly.

Pair Corralation between Taseco Air and BaoMinh Insurance

Assuming the 90 days trading horizon Taseco Air is expected to generate 2.8 times less return on investment than BaoMinh Insurance. But when comparing it to its historical volatility, Taseco Air Services is 1.2 times less risky than BaoMinh Insurance. It trades about 0.01 of its potential returns per unit of risk. BaoMinh Insurance Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,906,752  in BaoMinh Insurance Corp on October 4, 2024 and sell it today you would earn a total of  203,248  from holding BaoMinh Insurance Corp or generate 10.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.19%
ValuesDaily Returns

Taseco Air Services  vs.  BaoMinh Insurance Corp

 Performance 
       Timeline  
Taseco Air Services 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Taseco Air Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Taseco Air is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
BaoMinh Insurance Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BaoMinh Insurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, BaoMinh Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Taseco Air and BaoMinh Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Taseco Air and BaoMinh Insurance

The main advantage of trading using opposite Taseco Air and BaoMinh Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taseco Air position performs unexpectedly, BaoMinh Insurance 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 BaoMinh Insurance will offset losses from the drop in BaoMinh Insurance's long position.
The idea behind Taseco Air Services and BaoMinh Insurance Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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