Correlation Between Greatek Electronics and Nantex Industry

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

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

Diversification Opportunities for Greatek Electronics and Nantex Industry

0.24

Correlation Coefficient

Greatek Electronics  Nantex Industry

Modest diversification

The 3 months correlation between Greatek and Nantex is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Nantex Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantex Industry and Greatek Electronics 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 Greatek Electronics are associated (or correlated) with Nantex Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantex Industry has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Nantex Industry go up and down completely randomly.

Pair Corralation between Greatek Electronics and Nantex Industry

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.7 times more return on investment than Nantex Industry. However, Greatek Electronics is 1.43 times less risky than Nantex Industry. It trades about 0.03 of its potential returns per unit of risk. Nantex Industry Co is currently generating about -0.06 per unit of risk. If you would invest  5,790  in Greatek Electronics on October 4, 2024 and sell it today you would earn a total of  80.00  from holding Greatek Electronics or generate 1.38% return on investment over 90 days.

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

Greatek Electronics  vs.  Nantex Industry Co

Greatek Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greatek Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Greatek Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Nantex Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nantex Industry Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nantex Industry 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 Greatek Electronics and Nantex Industry

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

The idea behind Greatek Electronics and Nantex Industry Co 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.