Correlation Between Greatek Electronics and O TA

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

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

Diversification Opportunities for Greatek Electronics and O TA

0.5

Correlation Coefficient

Greatek Electronics  O TA

Very weak diversification

The 3 months correlation between Greatek and 8924 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and O TA Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O TA Precision 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 O TA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O TA Precision has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and O TA go up and down completely randomly.

Pair Corralation between Greatek Electronics and O TA

Assuming the 90 days trading horizon Greatek Electronics is expected to generate 1.48 times more return on investment than O TA. However, Greatek Electronics is 1.48 times more volatile than O TA Precision Industry. It trades about 0.0 of its potential returns per unit of risk. O TA Precision Industry is currently generating about -0.36 per unit of risk. If you would invest  5,610  in Greatek Electronics on September 22, 2024 and sell it today you would lose (10.00) from holding Greatek Electronics or give up 0.18% of portfolio value over 90 days.

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

Greatek Electronics  vs.  O TA Precision Industry

Greatek Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greatek Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

O TA Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O TA Precision Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Greatek Electronics and O TA

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

The idea behind Greatek Electronics and O TA Precision Industry 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.