Correlation Between Greatek Electronics and G Shank

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

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

Diversification Opportunities for Greatek Electronics and G Shank

0.3

Correlation Coefficient

Greatek Electronics  G Shank

Weak diversification

The 3 months correlation between Greatek and 2476 is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and G Shank Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Shank Enterprise 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 G Shank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Shank Enterprise has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and G Shank go up and down completely randomly.

Pair Corralation between Greatek Electronics and G Shank

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.66 times more return on investment than G Shank. However, Greatek Electronics is 1.52 times less risky than G Shank. It trades about 0.13 of its potential returns per unit of risk. G Shank Enterprise Co is currently generating about 0.07 per unit of risk. If you would invest  5,690  in Greatek Electronics on September 29, 2024 and sell it today you would earn a total of  210.00  from holding Greatek Electronics or generate 3.69% 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.  G Shank Enterprise Co

Greatek Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greatek Electronics are ranked lower than 1 (%) 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.

G Shank Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Greatek Electronics and G Shank Enterprise 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.