Correlation Between Global Standard and People Technology
Can any of the company-specific risk be diversified away by investing in both Global Standard and People 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 Global Standard and People Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Standard Technology and People Technology, you can compare the effects of market volatilities on Global Standard and People 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 Global Standard with a short position of People Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Standard and People Technology.
Diversification Opportunities for Global Standard and People Technology
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and People is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global Standard Technology and People Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on People Technology and Global Standard 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 Global Standard Technology are associated (or correlated) with People Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of People Technology has no effect on the direction of Global Standard i.e., Global Standard and People Technology go up and down completely randomly.
Pair Corralation between Global Standard and People Technology
Assuming the 90 days trading horizon Global Standard Technology is expected to generate 0.93 times more return on investment than People Technology. However, Global Standard Technology is 1.07 times less risky than People Technology. It trades about -0.03 of its potential returns per unit of risk. People Technology is currently generating about -0.04 per unit of risk. If you would invest 1,732,000 in Global Standard Technology on August 28, 2024 and sell it today you would lose (160,000) from holding Global Standard Technology or give up 9.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Standard Technology vs. People Technology
Performance |
| Timeline |
| Global Standard Tech |
| People Technology |
Global Standard and People Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Standard and People Technology
The main advantage of trading using opposite Global Standard and People Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Standard position performs unexpectedly, People 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 People Technology will offset losses from the drop in People Technology's long position.| Global Standard vs. Korea Real Estate | Global Standard vs. Korea Ratings Co | Global Standard vs. IQuest Co | Global Standard vs. Wonbang Tech Co |
| People Technology vs. Samsung Electronics Co | People Technology vs. Samsung Electronics Co | People Technology vs. Hyundai Motor Co | People Technology vs. Hyundai Motor |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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