Correlation Between Greatek Electronics and Advanced International
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Advanced International 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 Advanced International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Advanced International Multitech, you can compare the effects of market volatilities on Greatek Electronics and Advanced International 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 Advanced International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Advanced International.
Diversification Opportunities for Greatek Electronics and Advanced International
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Greatek and Advanced is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Advanced International Multite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced International 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 Advanced International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced International has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Advanced International go up and down completely randomly.
Pair Corralation between Greatek Electronics and Advanced International
Assuming the 90 days trading horizon Greatek Electronics is expected to generate 1.6 times more return on investment than Advanced International. However, Greatek Electronics is 1.6 times more volatile than Advanced International Multitech. It trades about -0.08 of its potential returns per unit of risk. Advanced International Multitech is currently generating about -0.37 per unit of risk. If you would invest 5,870 in Greatek Electronics on August 29, 2024 and sell it today you would lose (130.00) from holding Greatek Electronics or give up 2.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greatek Electronics vs. Advanced International Multite
Performance |
| Timeline |
| Greatek Electronics |
| Advanced International |
Greatek Electronics and Advanced International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Advanced International
The main advantage of trading using opposite Greatek Electronics and Advanced International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Advanced International 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 Advanced International will offset losses from the drop in Advanced International's long position.| Greatek Electronics vs. Novatek Microelectronics Corp | Greatek Electronics vs. Sitronix Technology Corp | Greatek Electronics vs. Elan Microelectronics Corp | Greatek Electronics vs. Global Unichip Corp |
| Advanced International vs. Feng Tay Enterprises | Advanced International vs. Ruentex Materials Co | Advanced International vs. Symtek Automation Asia | Advanced International vs. CTCI 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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