Correlation Between PIE Industrial and Greatech Technology

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

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

Diversification Opportunities for PIE Industrial and Greatech Technology

0.88

Correlation Coefficient

PIE Industrial  Greatech Technology

Very poor diversification

The 3 months correlation between PIE and Greatech is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial Bhd and Greatech Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatech Technology Bhd and PIE Industrial 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 PIE Industrial Bhd are associated (or correlated) with Greatech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatech Technology Bhd has no effect on the direction of PIE Industrial i.e., PIE Industrial and Greatech Technology go up and down completely randomly.

Pair Corralation between PIE Industrial and Greatech Technology

Assuming the 90 days trading horizon PIE Industrial Bhd is expected to under-perform the Greatech Technology. In addition to that, PIE Industrial is 1.14 times more volatile than Greatech Technology Bhd. It trades about -0.28 of its total potential returns per unit of risk. Greatech Technology Bhd is currently generating about -0.16 per unit of volatility. If you would invest  207.00  in Greatech Technology Bhd on December 1, 2024 and sell it today you would lose (40.00) from holding Greatech Technology Bhd or give up 19.32% of portfolio value over 90 days.

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

PIE Industrial Bhd  vs.  Greatech Technology Bhd

PIE Industrial Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days PIE Industrial Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Greatech Technology Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greatech Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PIE Industrial and Greatech Technology

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

The idea behind PIE Industrial Bhd and Greatech Technology Bhd 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 Valuation module to check real value of public entities based on technical and fundamental data.