Correlation Between Global Unichip and Gigasolar Materials
Can any of the company-specific risk be diversified away by investing in both Global Unichip and Gigasolar Materials 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 Gigasolar Materials 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 Gigasolar Materials, you can compare the effects of market volatilities on Global Unichip and Gigasolar Materials 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 Gigasolar Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Unichip and Gigasolar Materials.
Diversification Opportunities for Global Unichip and Gigasolar Materials
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Global and Gigasolar is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Global Unichip Corp and Gigasolar Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gigasolar Materials 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 Gigasolar Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gigasolar Materials has no effect on the direction of Global Unichip i.e., Global Unichip and Gigasolar Materials go up and down completely randomly.
Pair Corralation between Global Unichip and Gigasolar Materials
Assuming the 90 days trading horizon Global Unichip Corp is expected to generate 1.38 times more return on investment than Gigasolar Materials. However, Global Unichip is 1.38 times more volatile than Gigasolar Materials. It trades about 0.05 of its potential returns per unit of risk. Gigasolar Materials is currently generating about -0.01 per unit of risk. If you would invest 76,100 in Global Unichip Corp on August 26, 2024 and sell it today you would earn a total of 48,400 from holding Global Unichip Corp or generate 63.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Unichip Corp vs. Gigasolar Materials
Performance |
| Timeline |
| Global Unichip Corp |
| Gigasolar Materials |
Global Unichip and Gigasolar Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Unichip and Gigasolar Materials
The main advantage of trading using opposite Global Unichip and Gigasolar Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Unichip position performs unexpectedly, Gigasolar Materials 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 Gigasolar Materials will offset losses from the drop in Gigasolar Materials' long position.| Global Unichip vs. Novatek Microelectronics Corp | Global Unichip vs. Quanta Computer | Global Unichip vs. United Microelectronics |
| Gigasolar Materials vs. Trade Van Information Services | Gigasolar Materials vs. Insyde Software | Gigasolar Materials vs. C Media Electronics | Gigasolar Materials vs. Formosa Chemicals Fibre |
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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