Correlation Between Loop Telecommunicatio and Great Computer
Can any of the company-specific risk be diversified away by investing in both Loop Telecommunicatio and Great Computer 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 Loop Telecommunicatio and Great Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Loop Telecommunication International and Great Computer, you can compare the effects of market volatilities on Loop Telecommunicatio and Great Computer 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 Loop Telecommunicatio with a short position of Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Loop Telecommunicatio and Great Computer.
Diversification Opportunities for Loop Telecommunicatio and Great Computer
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Loop and Great is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Loop Telecommunication Interna and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer and Loop Telecommunicatio 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 Loop Telecommunication International are associated (or correlated) with Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Loop Telecommunicatio i.e., Loop Telecommunicatio and Great Computer go up and down completely randomly.
Pair Corralation between Loop Telecommunicatio and Great Computer
Assuming the 90 days trading horizon Loop Telecommunicatio is expected to generate 6.15 times less return on investment than Great Computer. But when comparing it to its historical volatility, Loop Telecommunication International is 12.67 times less risky than Great Computer. It trades about 0.09 of its potential returns per unit of risk. Great Computer is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,240 in Great Computer on September 3, 2024 and sell it today you would earn a total of 760.00 from holding Great Computer or generate 61.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Loop Telecommunication Interna vs. Great Computer
Performance |
| Timeline |
| Loop Telecommunication |
| Great Computer |
Loop Telecommunicatio and Great Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Loop Telecommunicatio and Great Computer
The main advantage of trading using opposite Loop Telecommunicatio and Great Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Loop Telecommunicatio position performs unexpectedly, Great Computer 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 Great Computer will offset losses from the drop in Great Computer's long position.| Loop Telecommunicatio vs. Taiwan Semiconductor Manufacturing | Loop Telecommunicatio vs. Yang Ming Marine | Loop Telecommunicatio vs. ASE Industrial Holding | Loop Telecommunicatio vs. AU Optronics |
| Great Computer vs. Airtac International Group | Great Computer vs. TECO Electric Machinery | Great Computer vs. Chung Hsin Electric Machinery | Great Computer vs. Ruentex Development 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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