Correlation Between Nasdaq and Tang Eng

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

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

Diversification Opportunities for Nasdaq and Tang Eng

0.15

Correlation Coefficient

Nasdaq  Tang Eng

Average diversification

The 3 months correlation between Nasdaq and Tang is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Tang Eng Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tang Eng Iron and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Tang Eng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tang Eng Iron has no effect on the direction of Nasdaq i.e., Nasdaq and Tang Eng go up and down completely randomly.

Pair Corralation between Nasdaq and Tang Eng

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.76 times more return on investment than Tang Eng. However, Nasdaq Inc is 1.31 times less risky than Tang Eng. It trades about 0.01 of its potential returns per unit of risk. Tang Eng Iron is currently generating about -0.15 per unit of risk. If you would invest  7,954  in Nasdaq Inc on September 19, 2024 and sell it today you would earn a total of  7.00  from holding Nasdaq Inc or generate 0.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  Tang Eng Iron

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tang Eng Iron

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasdaq and Tang Eng

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

The idea behind Nasdaq Inc and Tang Eng Iron 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.

Check out your portfolio center.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.