Correlation Between Greatek Electronics and Mirle Automation

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

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

Diversification Opportunities for Greatek Electronics and Mirle Automation

0.05

Correlation Coefficient

Greatek Electronics  Mirle Automation

Significant diversification

The 3 months correlation between Greatek and Mirle is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Mirle Automation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirle Automation 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 Mirle Automation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirle Automation Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Mirle Automation go up and down completely randomly.

Pair Corralation between Greatek Electronics and Mirle Automation

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 1.32 times less return on investment than Mirle Automation. But when comparing it to its historical volatility, Greatek Electronics is 2.71 times less risky than Mirle Automation. It trades about 0.19 of its potential returns per unit of risk. Mirle Automation Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  7,240  in Mirle Automation Corp on December 5, 2024 and sell it today you would earn a total of  320.00  from holding Mirle Automation Corp or generate 4.42% return on investment over 90 days.

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

Greatek Electronics  vs.  Mirle Automation Corp

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.

Mirle Automation Corp

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Greatek Electronics and Mirle Automation 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.