Correlation Between VirnetX Holding and Taoping

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

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

Diversification Opportunities for VirnetX Holding and Taoping

0.05

Correlation Coefficient

VirnetX Holding  Taoping

Significant diversification

The 3 months correlation between VirnetX and Taoping is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding VirnetX Holding Corp and Taoping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taoping and VirnetX Holding 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 VirnetX Holding Corp 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 VirnetX Holding i.e., VirnetX Holding and Taoping go up and down completely randomly.

Pair Corralation between VirnetX Holding and Taoping

Considering the 90-day investment horizon VirnetX Holding Corp is expected to under-perform the Taoping. But the stock apears to be less risky and, when comparing its historical volatility, VirnetX Holding Corp is 3.41 times less risky than Taoping. The stock trades about -0.04 of its potential returns per unit of risk. The Taoping is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  836.00  in Taoping on March 1, 2025 and sell it today you would lose (22.00) from holding Taoping or give up 2.63% of portfolio value over 90 days.

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

VirnetX Holding Corp  vs.  Taoping

VirnetX Holding Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days VirnetX Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Taoping

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taoping are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Taoping reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VirnetX Holding and Taoping

The main advantage of trading using opposite VirnetX Holding and Taoping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VirnetX Holding 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 VirnetX Holding Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.