Correlation Between Aiptek International and Grand Plastic

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

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

Diversification Opportunities for Aiptek International and Grand Plastic

0.12

Correlation Coefficient

Aiptek International  Grand Plastic

Average diversification

The 3 months correlation between Aiptek and Grand is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aiptek International 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 Aiptek International 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 Aiptek International 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 Aiptek International i.e., Aiptek International and Grand Plastic go up and down completely randomly.

Pair Corralation between Aiptek International and Grand Plastic

Assuming the 90 days trading horizon Aiptek International is expected to generate 1.13 times more return on investment than Grand Plastic. However, Aiptek International is 1.13 times more volatile than Grand Plastic Technology. It trades about 0.01 of its potential returns per unit of risk. Grand Plastic Technology is currently generating about -0.13 per unit of risk. If you would invest  1,515  in Aiptek International on October 9, 2024 and sell it today you would lose (15.00) from holding Aiptek International or give up 0.99% of portfolio value over 90 days.

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

Aiptek International  vs.  Grand Plastic Technology

Aiptek International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aiptek International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Aiptek International 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Aiptek International and Grand Plastic

The main advantage of trading using opposite Aiptek International and Grand Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aiptek International 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 Aiptek International 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 Global Correlations module to find global opportunities by holding instruments from different markets.