Correlation Between Advanced Ceramic and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both Advanced Ceramic and Giant Manufacturing 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 Advanced Ceramic and Giant Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Ceramic X and Giant Manufacturing Co, you can compare the effects of market volatilities on Advanced Ceramic and Giant Manufacturing 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 Advanced Ceramic with a short position of Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Ceramic and Giant Manufacturing.
Diversification Opportunities for Advanced Ceramic and Giant Manufacturing
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Giant is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Ceramic X and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing and Advanced Ceramic 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 Advanced Ceramic X are associated (or correlated) with Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of Advanced Ceramic i.e., Advanced Ceramic and Giant Manufacturing go up and down completely randomly.
Pair Corralation between Advanced Ceramic and Giant Manufacturing
Assuming the 90 days trading horizon Advanced Ceramic X is expected to generate 1.36 times more return on investment than Giant Manufacturing. However, Advanced Ceramic is 1.36 times more volatile than Giant Manufacturing Co. It trades about 0.03 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.18 per unit of risk. If you would invest 17,700 in Advanced Ceramic X on October 7, 2024 and sell it today you would earn a total of 150.00 from holding Advanced Ceramic X or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Ceramic X vs. Giant Manufacturing Co
Performance |
| Timeline |
| Advanced Ceramic X |
| Giant Manufacturing |
Advanced Ceramic and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Ceramic and Giant Manufacturing
The main advantage of trading using opposite Advanced Ceramic and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Ceramic position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing's long position.| Advanced Ceramic vs. Posiflex Technology | Advanced Ceramic vs. Asmedia Technology | Advanced Ceramic vs. Chialin Precision Industrial | Advanced Ceramic vs. Powertech Industrial Co |
| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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