Correlation Between Golden Long and Microtips Technology

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

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

Diversification Opportunities for Golden Long and Microtips Technology

-0.01

Correlation Coefficient

Golden Long  Microtips Technology

Good diversification

The 3 months correlation between Golden and Microtips is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Golden Long Teng and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology and Golden Long 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 Golden Long Teng are associated (or correlated) with Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of Golden Long i.e., Golden Long and Microtips Technology go up and down completely randomly.

Pair Corralation between Golden Long and Microtips Technology

Assuming the 90 days trading horizon Golden Long Teng is expected to generate 1.09 times more return on investment than Microtips Technology. However, Golden Long is 1.09 times more volatile than Microtips Technology. It trades about 0.08 of its potential returns per unit of risk. Microtips Technology is currently generating about 0.04 per unit of risk. If you would invest  1,480  in Golden Long Teng on October 4, 2024 and sell it today you would earn a total of  1,340  from holding Golden Long Teng or generate 90.54% return on investment over 90 days.

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

Golden Long Teng  vs.  Microtips Technology

Golden Long Teng

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Long Teng 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Microtips Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Microtips Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Microtips Technology is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Golden Long and Microtips Technology

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

The idea behind Golden Long Teng and Microtips 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.