Correlation Between Gen Digital and Taoping

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

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

Diversification Opportunities for Gen Digital and Taoping

-0.77

Correlation Coefficient

Gen Digital  Taoping

Pay attention - limited upside

The 3 months correlation between Gen and Taoping is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gen Digital and Taoping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taoping and Gen Digital 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 Gen Digital 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 Gen Digital i.e., Gen Digital and Taoping go up and down completely randomly.

Pair Corralation between Gen Digital and Taoping

Considering the 90-day investment horizon Gen Digital is expected to generate 0.4 times more return on investment than Taoping. However, Gen Digital is 2.49 times less risky than Taoping. It trades about 0.0 of its potential returns per unit of risk. Taoping is currently generating about -0.3 per unit of risk. If you would invest  2,991  in Gen Digital on September 15, 2024 and sell it today you would lose (5.00) from holding Gen Digital or give up 0.17% of portfolio value over 90 days.

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

Gen Digital  vs.  Taoping

Gen Digital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gen Digital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Gen Digital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Gen Digital and Taoping

The main advantage of trading using opposite Gen Digital and Taoping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gen Digital 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 Gen Digital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.