Correlation Between GTM Holdings and HUA YU

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

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

Diversification Opportunities for GTM Holdings and HUA YU

0.81

Correlation Coefficient

GTM Holdings  HUA YU

Very poor diversification

The 3 months correlation between GTM and HUA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GTM Holdings Corp and HUA YU LIEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUA YU LIEN and GTM Holdings 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 GTM Holdings Corp are associated (or correlated) with HUA YU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUA YU LIEN has no effect on the direction of GTM Holdings i.e., GTM Holdings and HUA YU go up and down completely randomly.

Pair Corralation between GTM Holdings and HUA YU

Assuming the 90 days trading horizon GTM Holdings is expected to generate 2.19 times less return on investment than HUA YU. But when comparing it to its historical volatility, GTM Holdings Corp is 3.26 times less risky than HUA YU. It trades about 0.06 of its potential returns per unit of risk. HUA YU LIEN is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  12,600  in HUA YU LIEN on December 28, 2024 and sell it today you would earn a total of  400.00  from holding HUA YU LIEN or generate 3.17% return on investment over 90 days.

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

GTM Holdings Corp  vs.  HUA YU LIEN

GTM Holdings Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GTM Holdings Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, GTM Holdings is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HUA YU LIEN

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in HUA YU LIEN are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, HUA YU is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with GTM Holdings and HUA YU

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

The idea behind GTM Holdings Corp and HUA YU LIEN 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.