Correlation Between Gigasolar Materials and Motech Industries

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

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

Diversification Opportunities for Gigasolar Materials and Motech Industries

0.73

Correlation Coefficient

Gigasolar Materials  Motech Industries

Poor diversification

The 3 months correlation between Gigasolar and Motech is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gigasolar Materials and Motech Industries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motech Industries and Gigasolar Materials 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 Gigasolar Materials are associated (or correlated) with Motech Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motech Industries has no effect on the direction of Gigasolar Materials i.e., Gigasolar Materials and Motech Industries go up and down completely randomly.

Pair Corralation between Gigasolar Materials and Motech Industries

Assuming the 90 days trading horizon Gigasolar Materials is expected to under-perform the Motech Industries. In addition to that, Gigasolar Materials is 1.11 times more volatile than Motech Industries Co. It trades about -0.15 of its total potential returns per unit of risk. Motech Industries Co is currently generating about -0.01 per unit of volatility. If you would invest  2,435  in Motech Industries Co on September 13, 2024 and sell it today you would lose (40.00) from holding Motech Industries Co or give up 1.64% of portfolio value over 90 days.

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

Gigasolar Materials  vs.  Motech Industries Co

Gigasolar Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gigasolar Materials 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.

Motech Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gigasolar Materials and Motech Industries

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

The idea behind Gigasolar Materials and Motech Industries 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.

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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.