Correlation Between Gnosis and Taiko

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

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

Diversification Opportunities for Gnosis and Taiko

0.14

Correlation Coefficient

Gnosis  Taiko

Average diversification

The 3 months correlation between Gnosis and Taiko is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Gnosis and Taiko in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiko and Gnosis 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 Gnosis are associated (or correlated) with Taiko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiko has no effect on the direction of Gnosis i.e., Gnosis and Taiko go up and down completely randomly.

Pair Corralation between Gnosis and Taiko

Assuming the 90 days trading horizon Gnosis is expected to generate 0.77 times more return on investment than Taiko. However, Gnosis is 1.3 times less risky than Taiko. It trades about 0.25 of its potential returns per unit of risk. Taiko is currently generating about 0.14 per unit of risk. If you would invest  14,704  in Gnosis on September 2, 2024 and sell it today you would earn a total of  13,159  from holding Gnosis or generate 89.49% return on investment over 90 days.

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

Gnosis  vs.  Taiko

Gnosis

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gnosis are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Gnosis exhibited solid returns over the last few months and may actually be approaching a breakup point.

Taiko

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taiko are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Taiko exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gnosis and Taiko

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

The idea behind Gnosis and Taiko 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.