Correlation Between Gloria Material and Baotek Industrial

Can any of the company-specific risk be diversified away by investing in both Gloria Material and Baotek Industrial 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 Baotek Industrial 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 Baotek Industrial Materials, you can compare the effects of market volatilities on Gloria Material and Baotek Industrial 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 Baotek Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gloria Material and Baotek Industrial.

Diversification Opportunities for Gloria Material and Baotek Industrial

0.29

Correlation Coefficient

Gloria Material  Baotek Industrial

Modest diversification

The 3 months correlation between Gloria and Baotek is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Gloria Material Technology and Baotek Industrial Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baotek Industrial 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 Baotek Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baotek Industrial has no effect on the direction of Gloria Material i.e., Gloria Material and Baotek Industrial go up and down completely randomly.

Pair Corralation between Gloria Material and Baotek Industrial

Assuming the 90 days trading horizon Gloria Material Technology is expected to generate 0.55 times more return on investment than Baotek Industrial. However, Gloria Material Technology is 1.82 times less risky than Baotek Industrial. It trades about 0.06 of its potential returns per unit of risk. Baotek Industrial Materials is currently generating about -0.09 per unit of risk. If you would invest  4,610  in Gloria Material Technology on October 24, 2024 and sell it today you would earn a total of  225.00  from holding Gloria Material Technology or generate 4.88% return on investment over 90 days.

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

Gloria Material Technology  vs.  Baotek Industrial Materials

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.

Baotek Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Gloria Material and Baotek Industrial

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

The idea behind Gloria Material Technology and Baotek Industrial Materials 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.