Correlation Between Gloria Material and Chialin Precision

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

By analyzing existing cross correlation between Gloria Material Technology and Chialin Precision Industrial, you can compare the effects of market volatilities on Gloria Material and Chialin Precision 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 Gloria Material with a short position of Chialin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gloria Material and Chialin Precision.

Diversification Opportunities for Gloria Material and Chialin Precision

-0.35

Correlation Coefficient

Gloria Material  Chialin Precision

Very good diversification

The 3 months correlation between Gloria and Chialin is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Gloria Material Technology and Chialin Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chialin Precision and Gloria Material 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 Gloria Material Technology are associated (or correlated) with Chialin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chialin Precision has no effect on the direction of Gloria Material i.e., Gloria Material and Chialin Precision go up and down completely randomly.

Pair Corralation between Gloria Material and Chialin Precision

Assuming the 90 days trading horizon Gloria Material is expected to generate 2.41 times less return on investment than Chialin Precision. In addition to that, Gloria Material is 1.1 times more volatile than Chialin Precision Industrial. It trades about 0.05 of its total potential returns per unit of risk. Chialin Precision Industrial is currently generating about 0.14 per unit of volatility. If you would invest  8,280  in Chialin Precision Industrial on October 23, 2024 and sell it today you would earn a total of  920.00  from holding Chialin Precision Industrial or generate 11.11% return on investment over 90 days.

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

Gloria Material Technology  vs.  Chialin Precision Industrial

Gloria Material Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gloria Material Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Gloria Material is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chialin Precision

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chialin Precision Industrial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chialin Precision may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Gloria Material and Chialin Precision

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

The idea behind Gloria Material Technology and Chialin Precision Industrial 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.