Correlation Between Goke Microelectronics and Offshore Oil

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

By analyzing existing cross correlation between Goke Microelectronics Co and Offshore Oil Engineering, you can compare the effects of market volatilities on Goke Microelectronics and Offshore Oil 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 Goke Microelectronics with a short position of Offshore Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goke Microelectronics and Offshore Oil.

Diversification Opportunities for Goke Microelectronics and Offshore Oil

0.45

Correlation Coefficient

Goke Microelectronics  Offshore Oil

Very weak diversification

The 3 months correlation between Goke and Offshore is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Goke Microelectronics Co and Offshore Oil Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Offshore Oil Engineering and Goke Microelectronics 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 Goke Microelectronics Co are associated (or correlated) with Offshore Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Offshore Oil Engineering has no effect on the direction of Goke Microelectronics i.e., Goke Microelectronics and Offshore Oil go up and down completely randomly.

Pair Corralation between Goke Microelectronics and Offshore Oil

Assuming the 90 days trading horizon Goke Microelectronics Co is not expected to generate positive returns. Moreover, Goke Microelectronics is 1.83 times more volatile than Offshore Oil Engineering. It trades away all of its potential returns to assume current level of volatility. Offshore Oil Engineering is currently generating about -0.01 per unit of risk. If you would invest  7,395  in Goke Microelectronics Co on October 5, 2024 and sell it today you would lose (1,467) from holding Goke Microelectronics Co or give up 19.84% of portfolio value over 90 days.

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

Goke Microelectronics Co  vs.  Offshore Oil Engineering

Goke Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goke Microelectronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Offshore Oil Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Offshore Oil Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Goke Microelectronics and Offshore Oil

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

The idea behind Goke Microelectronics Co and Offshore Oil Engineering 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.