Correlation Between Great Wall and Universal Textile
Can any of the company-specific risk be diversified away by investing in both Great Wall and Universal Textile 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 Wall and Universal Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Universal Textile Co, you can compare the effects of market volatilities on Great Wall and Universal Textile 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 Wall with a short position of Universal Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Universal Textile.
Diversification Opportunities for Great Wall and Universal Textile
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Universal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Universal Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Textile and Great Wall 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 Wall Enterprise are associated (or correlated) with Universal Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Textile has no effect on the direction of Great Wall i.e., Great Wall and Universal Textile go up and down completely randomly.
Pair Corralation between Great Wall and Universal Textile
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.39 times more return on investment than Universal Textile. However, Great Wall Enterprise is 2.58 times less risky than Universal Textile. It trades about 0.31 of its potential returns per unit of risk. Universal Textile Co is currently generating about -0.1 per unit of risk. If you would invest 5,110 in Great Wall Enterprise on August 29, 2024 and sell it today you would earn a total of 210.00 from holding Great Wall Enterprise or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Universal Textile Co
Performance |
| Timeline |
| Great Wall Enterprise |
| Universal Textile |
Great Wall and Universal Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Universal Textile
The main advantage of trading using opposite Great Wall and Universal Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Universal Textile 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 Universal Textile will offset losses from the drop in Universal Textile's long position.The idea behind Great Wall Enterprise and Universal Textile Co 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.| Universal Textile vs. Yulon Finance Corp | Universal Textile vs. Taiwan Secom Co | Universal Textile vs. Pou Chen Corp | Universal Textile vs. Great Wall Enterprise |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Global Correlations Find global opportunities by holding instruments from different markets |