Correlation Between Greatek Electronics and Systex Corp
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Systex Corp 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 Systex Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Systex Corp, you can compare the effects of market volatilities on Greatek Electronics and Systex Corp 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 Systex Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Systex Corp.
Diversification Opportunities for Greatek Electronics and Systex Corp
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Greatek and Systex is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Systex Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Systex 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 Systex Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Systex Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Systex Corp go up and down completely randomly.
Pair Corralation between Greatek Electronics and Systex Corp
Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.35 times more return on investment than Systex Corp. However, Greatek Electronics is 2.89 times less risky than Systex Corp. It trades about 0.55 of its potential returns per unit of risk. Systex Corp is currently generating about -0.22 per unit of risk. If you would invest 5,820 in Greatek Electronics on November 4, 2024 and sell it today you would earn a total of 380.00 from holding Greatek Electronics or generate 6.53% 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. Systex Corp
Performance |
| Timeline |
| Greatek Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Systex Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Greatek Electronics and Systex Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Systex Corp
The main advantage of trading using opposite Greatek Electronics and Systex Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Systex Corp 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 Systex Corp will offset losses from the drop in Systex Corp's long position.The idea behind Greatek Electronics and Systex Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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