Correlation Between Greatek Electronics and Thinking Electronic

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

By analyzing existing cross correlation between Greatek Electronics and Thinking Electronic Industrial, you can compare the effects of market volatilities on Greatek Electronics and Thinking Electronic 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 Thinking Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Thinking Electronic.

Diversification Opportunities for Greatek Electronics and Thinking Electronic

0.64

Correlation Coefficient

Greatek Electronics  Thinking Electronic

Poor diversification

The 3 months correlation between Greatek and Thinking is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Thinking Electronic Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thinking Electronic 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 Thinking Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thinking Electronic has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Thinking Electronic go up and down completely randomly.

Pair Corralation between Greatek Electronics and Thinking Electronic

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.71 times more return on investment than Thinking Electronic. However, Greatek Electronics is 1.41 times less risky than Thinking Electronic. It trades about 0.16 of its potential returns per unit of risk. Thinking Electronic Industrial is currently generating about 0.03 per unit of risk. If you would invest  5,830  in Greatek Electronics on December 5, 2024 and sell it today you would earn a total of  570.00  from holding Greatek Electronics or generate 9.78% return on investment over 90 days.

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

Greatek Electronics  vs.  Thinking Electronic Industrial

Greatek Electronics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greatek Electronics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Greatek Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thinking Electronic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thinking Electronic Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Thinking Electronic 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 Thinking Electronic

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

The idea behind Greatek Electronics and Thinking Electronic Industrial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.