Correlation Between Greatek Electronics and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and Taiwan Fu 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 Taiwan Fu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greatek Electronics and Taiwan Fu Hsing, you can compare the effects of market volatilities on Greatek Electronics and Taiwan Fu 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 Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and Taiwan Fu.
Diversification Opportunities for Greatek Electronics and Taiwan Fu
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Greatek and Taiwan is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing 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 Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and Taiwan Fu go up and down completely randomly.
Pair Corralation between Greatek Electronics and Taiwan Fu
Assuming the 90 days trading horizon Greatek Electronics is expected to under-perform the Taiwan Fu. But the stock apears to be less risky and, when comparing its historical volatility, Greatek Electronics is 2.17 times less risky than Taiwan Fu. The stock trades about -0.08 of its potential returns per unit of risk. The Taiwan Fu Hsing is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,380 in Taiwan Fu Hsing on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Taiwan Fu Hsing or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greatek Electronics vs. Taiwan Fu Hsing
Performance |
| Timeline |
| Greatek Electronics |
| Taiwan Fu Hsing |
Greatek Electronics and Taiwan Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greatek Electronics and Taiwan Fu
The main advantage of trading using opposite Greatek Electronics and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatek Electronics position performs unexpectedly, Taiwan Fu 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 Taiwan Fu will offset losses from the drop in Taiwan Fu'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 |
| Taiwan Fu vs. Yulon Motor Co | Taiwan Fu vs. Far Eastern Department | Taiwan Fu vs. China Steel Corp | Taiwan Fu vs. Chang Hwa Commercial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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