Correlation Between De Licacy and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both De Licacy and Giant Manufacturing 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 De Licacy and Giant Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Licacy Industrial and Giant Manufacturing Co, you can compare the effects of market volatilities on De Licacy and Giant Manufacturing 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 De Licacy with a short position of Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Licacy and Giant Manufacturing.
Diversification Opportunities for De Licacy and Giant Manufacturing
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 1464 and Giant is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing and De Licacy 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 De Licacy Industrial are associated (or correlated) with Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of De Licacy i.e., De Licacy and Giant Manufacturing go up and down completely randomly.
Pair Corralation between De Licacy and Giant Manufacturing
Assuming the 90 days trading horizon De Licacy Industrial is expected to generate 1.5 times more return on investment than Giant Manufacturing. However, De Licacy is 1.5 times more volatile than Giant Manufacturing Co. It trades about -0.04 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.48 per unit of risk. If you would invest 1,600 in De Licacy Industrial on August 26, 2024 and sell it today you would lose (55.00) from holding De Licacy Industrial or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Licacy Industrial vs. Giant Manufacturing Co
Performance |
| Timeline |
| De Licacy Industrial |
| Giant Manufacturing |
De Licacy and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Licacy and Giant Manufacturing
The main advantage of trading using opposite De Licacy and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Licacy position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing's long position.| De Licacy vs. Taiwan Semiconductor Manufacturing | De Licacy vs. Hon Hai Precision | De Licacy vs. MediaTek | De Licacy vs. Chunghwa Telecom Co |
| 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 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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