Correlation Between Greatek Electronics and Radiant Opto
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Radiant Opto 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 Radiant Opto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Radiant Opto Electronics Corp, you can compare the effects of market volatilities on Greatek Electronics and Radiant Opto 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 Radiant Opto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Radiant Opto.
Diversification Opportunities for Greatek Electronics and Radiant Opto
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Greatek and Radiant is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Radiant Opto Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Opto Electro 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 Radiant Opto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Opto Electro has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Radiant Opto go up and down completely randomly.
Pair Corralation between Greatek Electronics and Radiant Opto
Assuming the 90 days trading horizon Greatek Electronics is expected to under-perform the Radiant Opto. But the stock apears to be less risky and, when comparing its historical volatility, Greatek Electronics is 1.81 times less risky than Radiant Opto. The stock trades about -0.01 of its potential returns per unit of risk. The Radiant Opto Electronics Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 20,000 in Radiant Opto Electronics Corp on September 14, 2024 and sell it today you would lose (200.00) from holding Radiant Opto Electronics Corp or give up 1.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Greatek Electronics vs. Radiant Opto Electronics Corp
Performance |
Timeline |
Greatek Electronics |
Radiant Opto Electro |
Greatek Electronics and Radiant Opto Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Greatek Electronics and Radiant Opto
The main advantage of trading using opposite Greatek Electronics and Radiant Opto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Radiant Opto 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 Radiant Opto will offset losses from the drop in Radiant Opto's long position.Greatek Electronics vs. King Yuan Electronics | Greatek Electronics vs. Powertech Technology | Greatek Electronics vs. Realtek Semiconductor Corp | Greatek Electronics vs. Elan Microelectronics Corp |
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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 Stocks Directory module to find actively traded stocks across global markets.
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