Correlation Between Hota Industrial and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Hota Industrial 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 Hota Industrial and Greatek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hota Industrial Mfg and Greatek Electronics, you can compare the effects of market volatilities on Hota Industrial 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 Hota Industrial with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hota Industrial and Greatek Electronics.
Diversification Opportunities for Hota Industrial and Greatek Electronics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hota and Greatek is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Hota Industrial Mfg and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Hota Industrial 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 Hota Industrial Mfg 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 Hota Industrial i.e., Hota Industrial and Greatek Electronics go up and down completely randomly.
Pair Corralation between Hota Industrial and Greatek Electronics
Assuming the 90 days trading horizon Hota Industrial Mfg is expected to generate 2.15 times more return on investment than Greatek Electronics. However, Hota Industrial is 2.15 times more volatile than Greatek Electronics. It trades about 0.13 of its potential returns per unit of risk. Greatek Electronics is currently generating about -0.06 per unit of risk. If you would invest 5,660 in Hota Industrial Mfg on August 27, 2024 and sell it today you would earn a total of 380.00 from holding Hota Industrial Mfg or generate 6.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hota Industrial Mfg vs. Greatek Electronics
Performance |
| Timeline |
| Hota Industrial Mfg |
| Greatek Electronics |
Hota Industrial and Greatek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hota Industrial and Greatek Electronics
The main advantage of trading using opposite Hota Industrial and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hota Industrial 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.| Hota Industrial vs. Taiwan Semiconductor Manufacturing | Hota Industrial vs. Hon Hai Precision | Hota Industrial vs. MediaTek | Hota Industrial vs. Chunghwa Telecom Co |
| Greatek Electronics vs. King Yuan Electronics | Greatek Electronics vs. Powertech Technology | Greatek Electronics vs. Realtek Semiconductor Corp | Greatek Electronics vs. Elan Microelectronics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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