Correlation Between Min Aik and Grand Plastic

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

By analyzing existing cross correlation between Min Aik Technology and Grand Plastic Technology, you can compare the effects of market volatilities on Min Aik and Grand Plastic 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 Min Aik with a short position of Grand Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Min Aik and Grand Plastic.

Diversification Opportunities for Min Aik and Grand Plastic

-0.17

Correlation Coefficient

Min Aik  Grand Plastic

Good diversification

The 3 months correlation between Min and Grand is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Min Aik Technology and Grand Plastic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Plastic Technology and Min Aik 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 Min Aik Technology are associated (or correlated) with Grand Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Plastic Technology has no effect on the direction of Min Aik i.e., Min Aik and Grand Plastic go up and down completely randomly.

Pair Corralation between Min Aik and Grand Plastic

Assuming the 90 days trading horizon Min Aik Technology is expected to under-perform the Grand Plastic. But the stock apears to be less risky and, when comparing its historical volatility, Min Aik Technology is 1.14 times less risky than Grand Plastic. The stock trades about -0.09 of its potential returns per unit of risk. The Grand Plastic Technology is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  153,000  in Grand Plastic Technology on September 27, 2024 and sell it today you would lose (11,000) from holding Grand Plastic Technology or give up 7.19% of portfolio value over 90 days.

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

Min Aik Technology  vs.  Grand Plastic Technology

Min Aik Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Min Aik Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Min Aik is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Grand Plastic Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Plastic Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Min Aik and Grand Plastic

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

The idea behind Min Aik Technology and Grand Plastic 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.