Correlation Between Greatek Electronics and Holy Stone

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

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

Diversification Opportunities for Greatek Electronics and Holy Stone

-0.24

Correlation Coefficient

Greatek Electronics  Holy Stone

Very good diversification

The 3 months correlation between Greatek and Holy is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Holy Stone Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holy Stone 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 Holy Stone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holy Stone Enterprise has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Holy Stone go up and down completely randomly.

Pair Corralation between Greatek Electronics and Holy Stone

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 1.15 times more return on investment than Holy Stone. However, Greatek Electronics is 1.15 times more volatile than Holy Stone Enterprise. It trades about 0.16 of its potential returns per unit of risk. Holy Stone Enterprise is currently generating about 0.16 per unit of risk. If you would invest  5,640  in Greatek Electronics on December 21, 2024 and sell it today you would earn a total of  520.00  from holding Greatek Electronics or generate 9.22% return on investment over 90 days.

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

Greatek Electronics  vs.  Holy Stone Enterprise

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.

Holy Stone Enterprise

Risk-Adjusted Performance

Good

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

Pair Trading with Greatek Electronics and Holy Stone

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

The idea behind Greatek Electronics and Holy Stone Enterprise 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.