Correlation Between GlobalWafers and Macroblock

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

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

Diversification Opportunities for GlobalWafers and Macroblock

0.81

Correlation Coefficient

GlobalWafers  Macroblock

Very poor diversification

The 3 months correlation between GlobalWafers and Macroblock is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Macroblock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macroblock and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Macroblock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macroblock has no effect on the direction of GlobalWafers i.e., GlobalWafers and Macroblock go up and down completely randomly.

Pair Corralation between GlobalWafers and Macroblock

Assuming the 90 days trading horizon GlobalWafers Co is expected to under-perform the Macroblock. In addition to that, GlobalWafers is 1.32 times more volatile than Macroblock. It trades about -0.19 of its total potential returns per unit of risk. Macroblock is currently generating about -0.04 per unit of volatility. If you would invest  7,220  in Macroblock on September 28, 2024 and sell it today you would lose (140.00) from holding Macroblock or give up 1.94% of portfolio value over 90 days.

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

GlobalWafers Co  vs.  Macroblock

GlobalWafers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GlobalWafers Co 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.

Macroblock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macroblock 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.

Pair Trading with GlobalWafers and Macroblock

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

The idea behind GlobalWafers Co and Macroblock 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.