Correlation Between Taoping and Network International

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

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

Diversification Opportunities for Taoping and Network International

-0.54

Correlation Coefficient

Taoping  Network International

Excellent diversification

The 3 months correlation between Taoping and Network is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Taoping and Network International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network International and Taoping 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 Taoping are associated (or correlated) with Network International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network International has no effect on the direction of Taoping i.e., Taoping and Network International go up and down completely randomly.

Pair Corralation between Taoping and Network International

Given the investment horizon of 90 days Taoping is expected to under-perform the Network International. In addition to that, Taoping is 10.35 times more volatile than Network International Holdings. It trades about -0.04 of its total potential returns per unit of risk. Network International Holdings is currently generating about 0.12 per unit of volatility. If you would invest  495.00  in Network International Holdings on October 21, 2024 and sell it today you would earn a total of  25.00  from holding Network International Holdings or generate 5.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	48.0%
Values	Daily Returns

Taoping  vs.  Network International Holdings

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 February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Network International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Network International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taoping and Network International

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

The idea behind Taoping and Network International Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.