Correlation Between Acacia Research and Taoping

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

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

Diversification Opportunities for Acacia Research and Taoping

0.06

Correlation Coefficient

Acacia Research  Taoping

Significant diversification

The 3 months correlation between Acacia and Taoping is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Acacia Research and Taoping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taoping and Acacia Research 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 Acacia Research 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 Acacia Research i.e., Acacia Research and Taoping go up and down completely randomly.

Pair Corralation between Acacia Research and Taoping

Given the investment horizon of 90 days Acacia Research is expected to generate 0.21 times more return on investment than Taoping. However, Acacia Research is 4.86 times less risky than Taoping. It trades about 0.07 of its potential returns per unit of risk. Taoping is currently generating about 0.01 per unit of risk. If you would invest  308.00  in Acacia Research on May 6, 2025 and sell it today you would earn a total of  35.00  from holding Acacia Research or generate 11.36% return on investment over 90 days.

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

Acacia Research  vs.  Taoping

Acacia Research

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Acacia Research are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Acacia Research reported solid returns over the last few months and may actually be approaching a breakup point.

Taoping

Risk-Adjusted Performance

Very Weak

Over the last 90 days Taoping has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively uncertain basic indicators, Taoping may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Acacia Research and Taoping

The main advantage of trading using opposite Acacia Research and Taoping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acacia Research 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 Acacia Research 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.