Correlation Between Greatek Electronics and Zinwell

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

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

Diversification Opportunities for Greatek Electronics and Zinwell

-0.45

Correlation Coefficient

Greatek Electronics  Zinwell

Very good diversification

The 3 months correlation between Greatek and Zinwell is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Zinwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinwell 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 Zinwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinwell has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Zinwell go up and down completely randomly.

Pair Corralation between Greatek Electronics and Zinwell

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.58 times more return on investment than Zinwell. However, Greatek Electronics is 1.73 times less risky than Zinwell. It trades about 0.04 of its potential returns per unit of risk. Zinwell is currently generating about -0.01 per unit of risk. If you would invest  5,350  in Greatek Electronics on December 5, 2024 and sell it today you would earn a total of  1,050  from holding Greatek Electronics or generate 19.63% return on investment over 90 days.

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

Greatek Electronics  vs.  Zinwell

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.

Zinwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zinwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Greatek Electronics and Zinwell

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

The idea behind Greatek Electronics and Zinwell 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..