Correlation Between Greatek Electronics and Daxin Materials
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Daxin Materials 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 Daxin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Daxin Materials Corp, you can compare the effects of market volatilities on Greatek Electronics and Daxin Materials 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 Daxin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Daxin Materials.
Diversification Opportunities for Greatek Electronics and Daxin Materials
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Greatek and Daxin is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Daxin Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daxin Materials Corp 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 Daxin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daxin Materials Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Daxin Materials go up and down completely randomly.
Pair Corralation between Greatek Electronics and Daxin Materials
Assuming the 90 days trading horizon Greatek Electronics is expected to generate 2.92 times less return on investment than Daxin Materials. But when comparing it to its historical volatility, Greatek Electronics is 4.0 times less risky than Daxin Materials. It trades about 0.32 of its potential returns per unit of risk. Daxin Materials Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 19,350 in Daxin Materials Corp on October 25, 2024 and sell it today you would earn a total of 3,150 from holding Daxin Materials Corp or generate 16.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greatek Electronics vs. Daxin Materials Corp
Performance |
| Timeline |
| Greatek Electronics |
| Daxin Materials Corp |
Greatek Electronics and Daxin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Daxin Materials
The main advantage of trading using opposite Greatek Electronics and Daxin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Daxin Materials 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 Daxin Materials will offset losses from the drop in Daxin Materials' long position.| Greatek Electronics vs. King Yuan Electronics | Greatek Electronics vs. Powertech Technology | Greatek Electronics vs. Realtek Semiconductor Corp | Greatek Electronics vs. Elan Microelectronics Corp |
| Daxin Materials vs. Topco Scientific Co | Daxin Materials vs. Holtek Semiconductor | Daxin Materials vs. Greatek Electronics | Daxin Materials vs. Stark Technology |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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