Correlation Between Greatek Electronics and Dynamic Precision
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Dynamic Precision 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 Dynamic Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Dynamic Precision Industry, you can compare the effects of market volatilities on Greatek Electronics and Dynamic Precision 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 Dynamic Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Dynamic Precision.
Diversification Opportunities for Greatek Electronics and Dynamic Precision
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Greatek and Dynamic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Dynamic Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynamic Precision 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 Dynamic Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynamic Precision has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Dynamic Precision go up and down completely randomly.
Pair Corralation between Greatek Electronics and Dynamic Precision
Assuming the 90 days trading horizon Greatek Electronics is expected to generate 2.05 times more return on investment than Dynamic Precision. However, Greatek Electronics is 2.05 times more volatile than Dynamic Precision Industry. It trades about -0.02 of its potential returns per unit of risk. Dynamic Precision Industry is currently generating about -0.14 per unit of risk. If you would invest 5,770 in Greatek Electronics on August 25, 2024 and sell it today you would lose (60.00) from holding Greatek Electronics or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greatek Electronics vs. Dynamic Precision Industry
Performance |
| Timeline |
| Greatek Electronics |
| Dynamic Precision |
Greatek Electronics and Dynamic Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Dynamic Precision
The main advantage of trading using opposite Greatek Electronics and Dynamic Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Dynamic Precision 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 Dynamic Precision will offset losses from the drop in Dynamic Precision's long position.| Greatek Electronics vs. Novatek Microelectronics Corp | Greatek Electronics vs. Quanta Computer | Greatek Electronics vs. United Microelectronics |
| Dynamic Precision vs. International CSRC Investment | Dynamic Precision vs. Far EasTone Telecommunications | Dynamic Precision vs. Tai Tung Communication | Dynamic Precision vs. Tehmag Foods |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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