Correlation Between Giant Manufacturing and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Greatek Electronics 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 Giant Manufacturing and Greatek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Greatek Electronics, you can compare the effects of market volatilities on Giant Manufacturing and Greatek Electronics 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 Giant Manufacturing with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Greatek Electronics.
Diversification Opportunities for Giant Manufacturing and Greatek Electronics
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Giant and Greatek is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Greatek Electronics go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Greatek Electronics
Assuming the 90 days trading horizon Giant Manufacturing is expected to generate 2.39 times less return on investment than Greatek Electronics. In addition to that, Giant Manufacturing is 1.86 times more volatile than Greatek Electronics. It trades about 0.04 of its total potential returns per unit of risk. Greatek Electronics is currently generating about 0.17 per unit of volatility. If you would invest 5,780 in Greatek Electronics on December 4, 2024 and sell it today you would earn a total of 600.00 from holding Greatek Electronics or generate 10.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Giant Manufacturing Co vs. Greatek Electronics
Performance |
Timeline |
Giant Manufacturing |
Greatek Electronics |
Giant Manufacturing and Greatek Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Giant Manufacturing and Greatek Electronics
The main advantage of trading using opposite Giant Manufacturing and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Greatek Electronics 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' long position.Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises Corp |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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