Correlation Between Great Computer and Materials Analysis

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

By analyzing existing cross correlation between Great Computer and Materials Analysis Technology, you can compare the effects of market volatilities on Great Computer and Materials Analysis 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 Materials Analysis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Computer and Materials Analysis.

Diversification Opportunities for Great Computer and Materials Analysis

-0.64

Correlation Coefficient

Great Computer  Materials Analysis

Excellent diversification

The 3 months correlation between Great and Materials is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Materials Analysis Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Analysis 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 Materials Analysis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Analysis has no effect on the direction of Great Computer i.e., Great Computer and Materials Analysis go up and down completely randomly.

Pair Corralation between Great Computer and Materials Analysis

Assuming the 90 days trading horizon Great Computer is expected to under-perform the Materials Analysis. In addition to that, Great Computer is 3.67 times more volatile than Materials Analysis Technology. It trades about -0.06 of its total potential returns per unit of risk. Materials Analysis Technology is currently generating about -0.15 per unit of volatility. If you would invest  25,950  in Materials Analysis Technology on September 16, 2024 and sell it today you would lose (1,250) from holding Materials Analysis Technology or give up 4.82% of portfolio value over 90 days.

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

Great Computer  vs.  Materials Analysis Technology

Great Computer

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Computer are ranked lower than 8 (%) 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.

Materials Analysis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Analysis Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Materials Analysis is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Great Computer and Materials Analysis

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

The idea behind Great Computer and Materials Analysis 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.