Correlation Between Cemtrex and Taoping

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

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

Diversification Opportunities for Cemtrex and Taoping

0.58

Correlation Coefficient

Cemtrex  Taoping

Very weak diversification

The 3 months correlation between Cemtrex and Taoping is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cemtrex and Taoping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taoping and Cemtrex 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 Cemtrex are associated (or correlated) with Taoping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taoping has no effect on the direction of Cemtrex i.e., Cemtrex and Taoping go up and down completely randomly.

Pair Corralation between Cemtrex and Taoping

Given the investment horizon of 90 days Cemtrex is expected to under-perform the Taoping. In addition to that, Cemtrex is 5.42 times more volatile than Taoping. It trades about -0.14 of its total potential returns per unit of risk. Taoping is currently generating about -0.21 per unit of volatility. If you would invest  36.00  in Taoping on September 17, 2024 and sell it today you would lose (4.00) from holding Taoping or give up 11.11% of portfolio value over 90 days.

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

Cemtrex  vs.  Taoping

Cemtrex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemtrex 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 strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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

Pair Trading with Cemtrex and Taoping

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

The idea behind Cemtrex and Taoping 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .