Correlation Between Taihe Technologies and Eoptolink Technology

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

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

Diversification Opportunities for Taihe Technologies and Eoptolink Technology

0.74

Correlation Coefficient

Taihe Technologies  Eoptolink Technology

Poor diversification

The 3 months correlation between Taihe and Eoptolink is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Taihe Technologies and Eoptolink Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eoptolink Technology and Taihe Technologies 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 Taihe Technologies are associated (or correlated) with Eoptolink Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eoptolink Technology has no effect on the direction of Taihe Technologies i.e., Taihe Technologies and Eoptolink Technology go up and down completely randomly.

Pair Corralation between Taihe Technologies and Eoptolink Technology

Assuming the 90 days trading horizon Taihe Technologies is expected to generate 2.33 times less return on investment than Eoptolink Technology. In addition to that, Taihe Technologies is 1.25 times more volatile than Eoptolink Technology. It trades about 0.14 of its total potential returns per unit of risk. Eoptolink Technology is currently generating about 0.42 per unit of volatility. If you would invest  6,417  in Eoptolink Technology on April 24, 2025 and sell it today you would earn a total of  11,254  from holding Eoptolink Technology or generate 175.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Taihe Technologies  vs.  Eoptolink Technology

Taihe Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taihe Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taihe Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Eoptolink Technology

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Eoptolink Technology are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eoptolink Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taihe Technologies and Eoptolink Technology

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

The idea behind Taihe Technologies and Eoptolink Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..