Correlation Between Tai Tung and Auras Technology
Can any of the company-specific risk be diversified away by investing in both Tai Tung and Auras Technology 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 Tai Tung and Auras Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tai Tung Communication and Auras Technology Co, you can compare the effects of market volatilities on Tai Tung and Auras Technology 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 Tai Tung with a short position of Auras Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tai Tung and Auras Technology.
Diversification Opportunities for Tai Tung and Auras Technology
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tai and Auras is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tai Tung Communication and Auras Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auras Technology and Tai Tung 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 Tai Tung Communication are associated (or correlated) with Auras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auras Technology has no effect on the direction of Tai Tung i.e., Tai Tung and Auras Technology go up and down completely randomly.
Pair Corralation between Tai Tung and Auras Technology
Assuming the 90 days trading horizon Tai Tung Communication is expected to under-perform the Auras Technology. But the stock apears to be less risky and, when comparing its historical volatility, Tai Tung Communication is 1.63 times less risky than Auras Technology. The stock trades about -0.13 of its potential returns per unit of risk. The Auras Technology Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 60,000 in Auras Technology Co on September 5, 2024 and sell it today you would earn a total of 12,500 from holding Auras Technology Co or generate 20.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tai Tung Communication vs. Auras Technology Co
Performance |
| Timeline |
| Tai Tung Communication |
| Auras Technology |
Tai Tung and Auras Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tai Tung and Auras Technology
The main advantage of trading using opposite Tai Tung and Auras Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tai Tung position performs unexpectedly, Auras Technology 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 Auras Technology will offset losses from the drop in Auras Technology's long position.| Tai Tung vs. Zinwell | Tai Tung vs. Mercuries Life Insurance | Tai Tung vs. Darwin Precisions Corp | Tai Tung vs. Jinli Group Holdings |
| Auras Technology vs. Space Shuttle Hi Tech | Auras Technology vs. Sunfar Computer Co | Auras Technology vs. Ruentex Development Co | Auras Technology vs. Symtek Automation Asia |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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