Correlation Between Greatek Electronics and Hota Industrial
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Hota Industrial 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 Greatek Electronics and Hota Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Hota Industrial Mfg, you can compare the effects of market volatilities on Greatek Electronics and Hota Industrial 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 Greatek Electronics with a short position of Hota Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Hota Industrial.
Diversification Opportunities for Greatek Electronics and Hota Industrial
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Greatek and Hota is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Hota Industrial Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hota Industrial Mfg and Greatek Electronics 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 Greatek Electronics are associated (or correlated) with Hota Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hota Industrial Mfg has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Hota Industrial go up and down completely randomly.
Pair Corralation between Greatek Electronics and Hota Industrial
Assuming the 90 days trading horizon Greatek Electronics is expected to under-perform the Hota Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Greatek Electronics is 3.14 times less risky than Hota Industrial. The stock trades about -0.05 of its potential returns per unit of risk. The Hota Industrial Mfg is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,580 in Hota Industrial Mfg on August 31, 2024 and sell it today you would earn a total of 450.00 from holding Hota Industrial Mfg or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greatek Electronics vs. Hota Industrial Mfg
Performance |
| Timeline |
| Greatek Electronics |
| Hota Industrial Mfg |
Greatek Electronics and Hota Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Hota Industrial
The main advantage of trading using opposite Greatek Electronics and Hota Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Hota Industrial 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 Hota Industrial will offset losses from the drop in Hota Industrial's long position.| Greatek Electronics vs. United Microelectronics | Greatek Electronics vs. Winbond Electronics Corp | Greatek Electronics vs. Macronix International Co |
| Hota Industrial vs. Chaintech Technology Corp | Hota Industrial vs. AVerMedia Technologies | Hota Industrial vs. Avision | Hota Industrial 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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