Correlation Between Global Unichip and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Global Unichip and Greatek Electronics 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 Global Unichip and Greatek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Unichip Corp and Greatek Electronics, you can compare the effects of market volatilities on Global Unichip and Greatek Electronics 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 Global Unichip with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and Greatek Electronics.
Diversification Opportunities for Global Unichip and Greatek Electronics
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Greatek is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Global Unichip 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 Global Unichip Corp are associated (or correlated) with Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Global Unichip i.e., Global Unichip and Greatek Electronics go up and down completely randomly.
Pair Corralation between Global Unichip and Greatek Electronics
Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 3.15 times more return on investment than Greatek Electronics. However, Global Unichip is 3.15 times more volatile than Greatek Electronics. It trades about 0.12 of its potential returns per unit of risk. Greatek Electronics is currently generating about 0.25 per unit of risk. If you would invest 118,000 in Global Unichip Corp on November 27, 2024 and sell it today you would earn a total of 23,500 from holding Global Unichip Corp or generate 19.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Unichip Corp vs. Greatek Electronics
Performance |
| Timeline |
| Global Unichip Corp |
| Greatek Electronics |
Global Unichip and Greatek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Unichip and Greatek Electronics
The main advantage of trading using opposite Global Unichip and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip position performs unexpectedly, Greatek Electronics 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' long position.| Global Unichip vs. Alchip Technologies | Global Unichip vs. Realtek Semiconductor Corp | Global Unichip vs. Faraday Technology Corp | Global Unichip vs. Novatek Microelectronics Corp |
| Greatek Electronics vs. King Yuan Electronics | Greatek Electronics vs. Powertech Technology | Greatek Electronics vs. Realtek Semiconductor Corp | Greatek Electronics vs. Elan Microelectronics 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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