Correlation Between Greatek Electronics and Audix Corp

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

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

Diversification Opportunities for Greatek Electronics and Audix Corp

0.28

Correlation Coefficient

Greatek Electronics  Audix Corp

Modest diversification

The 3 months correlation between Greatek and Audix is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Audix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audix Corp 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 Audix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audix Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Audix Corp go up and down completely randomly.

Pair Corralation between Greatek Electronics and Audix Corp

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 2.1 times more return on investment than Audix Corp. However, Greatek Electronics is 2.1 times more volatile than Audix Corp. It trades about 0.0 of its potential returns per unit of risk. Audix Corp is currently generating about -0.03 per unit of risk. If you would invest  5,730  in Greatek Electronics on September 17, 2024 and sell it today you would lose (20.00) from holding Greatek Electronics or give up 0.35% of portfolio value over 90 days.

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

Greatek Electronics  vs.  Audix Corp

Greatek Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greatek Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Audix Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Audix Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Audix Corp 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 Audix Corp

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

The idea behind Greatek Electronics and Audix Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.