Correlation Between Taoping and Evertec

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

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

Diversification Opportunities for Taoping and Evertec

-0.34

Correlation Coefficient

Taoping  Evertec

Very good diversification

The 3 months correlation between Taoping and Evertec is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Taoping and Evertec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evertec 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 Evertec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evertec has no effect on the direction of Taoping i.e., Taoping and Evertec go up and down completely randomly.

Pair Corralation between Taoping and Evertec

Given the investment horizon of 90 days Taoping is expected to under-perform the Evertec. In addition to that, Taoping is 4.71 times more volatile than Evertec. It trades about -0.07 of its total potential returns per unit of risk. Evertec is currently generating about 0.05 per unit of volatility. If you would invest  3,420  in Evertec on August 30, 2024 and sell it today you would earn a total of  165.00  from holding Evertec or generate 4.82% return on investment over 90 days.

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

Taoping  vs.  Evertec

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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Evertec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Evertec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Evertec is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Taoping and Evertec

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

The idea behind Taoping and Evertec 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.