Correlation Between Great Wall and Thunder Tiger
Can any of the company-specific risk be diversified away by investing in both Great Wall and Thunder Tiger 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 Thunder Tiger 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 Thunder Tiger Corp, you can compare the effects of market volatilities on Great Wall and Thunder Tiger 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 Thunder Tiger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Thunder Tiger.
Diversification Opportunities for Great Wall and Thunder Tiger
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Great and Thunder is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Thunder Tiger Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Tiger Corp 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 Thunder Tiger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Tiger Corp has no effect on the direction of Great Wall i.e., Great Wall and Thunder Tiger go up and down completely randomly.
Pair Corralation between Great Wall and Thunder Tiger
Assuming the 90 days trading horizon Great Wall Enterprise is expected to generate 0.4 times more return on investment than Thunder Tiger. However, Great Wall Enterprise is 2.47 times less risky than Thunder Tiger. It trades about -0.05 of its potential returns per unit of risk. Thunder Tiger Corp is currently generating about -0.07 per unit of risk. If you would invest 5,670 in Great Wall Enterprise on September 1, 2024 and sell it today you would lose (340.00) from holding Great Wall Enterprise or give up 6.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Thunder Tiger Corp
Performance |
| Timeline |
| Great Wall Enterprise |
| Thunder Tiger Corp |
Great Wall and Thunder Tiger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Thunder Tiger
The main advantage of trading using opposite Great Wall and Thunder Tiger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Thunder Tiger 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 Thunder Tiger will offset losses from the drop in Thunder Tiger's long position.| Great Wall vs. De Licacy Industrial | Great Wall vs. Wisher Industrial Co | Great Wall vs. Tainan Enterprises Co |
| Thunder Tiger vs. Chaintech Technology Corp | Thunder Tiger vs. AVerMedia Technologies | Thunder Tiger vs. Avision | Thunder Tiger vs. Clevo Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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