Correlation Between Greatek Electronics and Tong Hsing
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Tong Hsing 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 Tong Hsing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Tong Hsing Electronic, you can compare the effects of market volatilities on Greatek Electronics and Tong Hsing 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 Tong Hsing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Tong Hsing.
Diversification Opportunities for Greatek Electronics and Tong Hsing
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Greatek and Tong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Tong Hsing Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tong Hsing Electronic 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 Tong Hsing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tong Hsing Electronic has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Tong Hsing go up and down completely randomly.
Pair Corralation between Greatek Electronics and Tong Hsing
Assuming the 90 days trading horizon Greatek Electronics is expected to generate 0.7 times more return on investment than Tong Hsing. However, Greatek Electronics is 1.44 times less risky than Tong Hsing. It trades about -0.05 of its potential returns per unit of risk. Tong Hsing Electronic is currently generating about -0.05 per unit of risk. If you would invest 6,300 in Greatek Electronics on September 1, 2024 and sell it today you would lose (630.00) from holding Greatek Electronics or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Greatek Electronics vs. Tong Hsing Electronic
Performance |
| Timeline |
| Greatek Electronics |
| Tong Hsing Electronic |
Greatek Electronics and Tong Hsing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Tong Hsing
The main advantage of trading using opposite Greatek Electronics and Tong Hsing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Tong Hsing 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 Tong Hsing will offset losses from the drop in Tong Hsing's 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 |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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