Correlation Between Moadata and GiantStep
Can any of the company-specific risk be diversified away by investing in both Moadata and GiantStep 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 Moadata and GiantStep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moadata Co and GiantStep Co, you can compare the effects of market volatilities on Moadata and GiantStep 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 Moadata with a short position of GiantStep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moadata and GiantStep.
Diversification Opportunities for Moadata and GiantStep
Very weak diversification
The 3 months correlation between Moadata and GiantStep is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Moadata Co and GiantStep Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GiantStep and Moadata 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 Moadata Co are associated (or correlated) with GiantStep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GiantStep has no effect on the direction of Moadata i.e., Moadata and GiantStep go up and down completely randomly.
Pair Corralation between Moadata and GiantStep
Assuming the 90 days trading horizon Moadata is expected to generate 1.37 times less return on investment than GiantStep. But when comparing it to its historical volatility, Moadata Co is 1.34 times less risky than GiantStep. It trades about 0.33 of its potential returns per unit of risk. GiantStep Co is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 502,000 in GiantStep Co on October 10, 2024 and sell it today you would earn a total of 171,000 from holding GiantStep Co or generate 34.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Moadata Co vs. GiantStep Co
Performance |
| Timeline |
| Moadata |
| GiantStep |
Moadata and GiantStep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moadata and GiantStep
The main advantage of trading using opposite Moadata and GiantStep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moadata position performs unexpectedly, GiantStep 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 GiantStep will offset losses from the drop in GiantStep's long position.The idea behind Moadata Co and GiantStep Co 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.| GiantStep vs. Seoyon Topmetal Co | GiantStep vs. Kakao Games Corp | GiantStep vs. MediaZen | GiantStep vs. Kukil Metal Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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