Correlation Between Taoping and XBP Europe

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

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

Diversification Opportunities for Taoping and XBP Europe

-0.04

Correlation Coefficient

Taoping  XBP Europe

Good diversification

The 3 months correlation between Taoping and XBP is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Taoping and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of Taoping i.e., Taoping and XBP Europe go up and down completely randomly.

Pair Corralation between Taoping and XBP Europe

Given the investment horizon of 90 days Taoping is expected to generate 1.38 times more return on investment than XBP Europe. However, Taoping is 1.38 times more volatile than XBP Europe Holdings. It trades about -0.01 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about -0.07 per unit of risk. If you would invest  35.00  in Taoping on October 21, 2024 and sell it today you would lose (3.00) from holding Taoping or give up 8.57% of portfolio value over 90 days.

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

Taoping  vs.  XBP Europe 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.

XBP Europe Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XBP Europe Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, XBP Europe is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Taoping and XBP Europe

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

The idea behind Taoping and XBP Europe 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.