Correlation Between Nasdaq and Ta Liang

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

By analyzing existing cross correlation between Nasdaq Inc and Ta Liang Technology, you can compare the effects of market volatilities on Nasdaq and Ta Liang 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 Ta Liang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Ta Liang.

Diversification Opportunities for Nasdaq and Ta Liang

-0.69

Correlation Coefficient

Nasdaq  Ta Liang

Excellent diversification

The 3 months correlation between Nasdaq and 3167 is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Ta Liang Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ta Liang Technology 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 Ta Liang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ta Liang Technology has no effect on the direction of Nasdaq i.e., Nasdaq and Ta Liang go up and down completely randomly.

Pair Corralation between Nasdaq and Ta Liang

Given the investment horizon of 90 days Nasdaq is expected to generate 2.43 times less return on investment than Ta Liang. But when comparing it to its historical volatility, Nasdaq Inc is 3.67 times less risky than Ta Liang. It trades about 0.14 of its potential returns per unit of risk. Ta Liang Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,130  in Ta Liang Technology on September 24, 2024 and sell it today you would earn a total of  4,270  from holding Ta Liang Technology or generate 69.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.4%
Values	Daily Returns

Nasdaq Inc  vs.  Ta Liang Technology

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Ta Liang Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ta Liang Technology 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 fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Nasdaq and Ta Liang

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

The idea behind Nasdaq Inc and Ta Liang Technology 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 Transaction History module to view history of all your transactions and understand their impact on performance.