Correlation Between Greatek Electronics and Zero One

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

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

Diversification Opportunities for Greatek Electronics and Zero One

0.57

Correlation Coefficient

Greatek Electronics  Zero One

Very weak diversification

The 3 months correlation between Greatek and Zero is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Zero One Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zero One Technology 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 Zero One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zero One Technology has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Zero One go up and down completely randomly.

Pair Corralation between Greatek Electronics and Zero One

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.31 times more return on investment than Zero One. However, Greatek Electronics is 3.26 times less risky than Zero One. It trades about 0.05 of its potential returns per unit of risk. Zero One Technology is currently generating about -0.02 per unit of risk. If you would invest  5,900  in Greatek Electronics on December 27, 2024 and sell it today you would earn a total of  130.00  from holding Greatek Electronics or generate 2.2% return on investment over 90 days.

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

Greatek Electronics  vs.  Zero One Technology

Greatek Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Greatek Electronics are ranked lower than 3 (%) 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.

Zero One Technology

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Greatek Electronics and Zero One Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.