Correlation Between GiantStep and Y Optics

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

By analyzing existing cross correlation between GiantStep Co and Y Optics Manufacture Co, you can compare the effects of market volatilities on GiantStep and Y Optics 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 GiantStep with a short position of Y Optics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GiantStep and Y Optics.

Diversification Opportunities for GiantStep and Y Optics

-0.31

Correlation Coefficient

GiantStep  Y Optics

Very good diversification

The 3 months correlation between GiantStep and 066430 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GiantStep Co and Y Optics Manufacture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Y Optics Manufacture and GiantStep 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 GiantStep Co are associated (or correlated) with Y Optics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Y Optics Manufacture has no effect on the direction of GiantStep i.e., GiantStep and Y Optics go up and down completely randomly.

Pair Corralation between GiantStep and Y Optics

Assuming the 90 days trading horizon GiantStep is expected to generate 59.9 times less return on investment than Y Optics. But when comparing it to its historical volatility, GiantStep Co is 1.63 times less risky than Y Optics. It trades about 0.01 of its potential returns per unit of risk. Y Optics Manufacture Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  54,200  in Y Optics Manufacture Co on December 25, 2024 and sell it today you would earn a total of  53,200  from holding Y Optics Manufacture Co or generate 98.15% return on investment over 90 days.

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

GiantStep Co  vs.  Y Optics Manufacture Co

GiantStep

Risk-Adjusted Performance

Weak

Over the last 90 days GiantStep Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GiantStep is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Y Optics Manufacture

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Y Optics Manufacture Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Y Optics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GiantStep and Y Optics

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

The idea behind GiantStep Co and Y Optics Manufacture Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.