Correlation Between Greatech Technology and IOI Bhd

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

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

Diversification Opportunities for Greatech Technology and IOI Bhd

0.47

Correlation Coefficient

Greatech Technology  IOI Bhd

Very weak diversification

The 3 months correlation between Greatech and IOI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Greatech Technology Bhd and IOI Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IOI Bhd and Greatech Technology 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 Greatech Technology Bhd are associated (or correlated) with IOI Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IOI Bhd has no effect on the direction of Greatech Technology i.e., Greatech Technology and IOI Bhd go up and down completely randomly.

Pair Corralation between Greatech Technology and IOI Bhd

Assuming the 90 days trading horizon Greatech Technology Bhd is expected to under-perform the IOI Bhd. In addition to that, Greatech Technology is 2.44 times more volatile than IOI Bhd. It trades about -0.08 of its total potential returns per unit of risk. IOI Bhd is currently generating about -0.02 per unit of volatility. If you would invest  386.00  in IOI Bhd on September 3, 2024 and sell it today you would lose (6.00) from holding IOI Bhd or give up 1.55% of portfolio value over 90 days.

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

Greatech Technology Bhd  vs.  IOI Bhd

Greatech Technology Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greatech Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

IOI Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IOI Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, IOI Bhd is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Greatech Technology and IOI Bhd

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

The idea behind Greatech Technology Bhd and IOI Bhd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.