Correlation Between Great Computer and Skardin Industrial

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

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

Diversification Opportunities for Great Computer and Skardin Industrial

-0.42

Correlation Coefficient

Great Computer  Skardin Industrial

Very good diversification

The 3 months correlation between Great and Skardin is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Skardin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skardin Industrial and Great Computer 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 Great Computer are associated (or correlated) with Skardin Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skardin Industrial has no effect on the direction of Great Computer i.e., Great Computer and Skardin Industrial go up and down completely randomly.

Pair Corralation between Great Computer and Skardin Industrial

Assuming the 90 days trading horizon Great Computer is expected to generate 1.46 times more return on investment than Skardin Industrial. However, Great Computer is 1.46 times more volatile than Skardin Industrial. It trades about -0.07 of its potential returns per unit of risk. Skardin Industrial is currently generating about -0.22 per unit of risk. If you would invest  2,020  in Great Computer on October 22, 2024 and sell it today you would lose (165.00) from holding Great Computer or give up 8.17% of portfolio value over 90 days.

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

Great Computer  vs.  Skardin Industrial

Great Computer

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Computer are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Great Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Skardin Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skardin Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Great Computer and Skardin Industrial

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

The idea behind Great Computer and Skardin 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.