Correlation Between Globaltek Fabrication and Drewloong Precision
Can any of the company-specific risk be diversified away by investing in both Globaltek Fabrication and Drewloong Precision 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 Globaltek Fabrication and Drewloong Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globaltek Fabrication Co and Drewloong Precision, you can compare the effects of market volatilities on Globaltek Fabrication and Drewloong Precision 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 Globaltek Fabrication with a short position of Drewloong Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globaltek Fabrication and Drewloong Precision.
Diversification Opportunities for Globaltek Fabrication and Drewloong Precision
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Globaltek and Drewloong is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Globaltek Fabrication Co and Drewloong Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Drewloong Precision and Globaltek Fabrication 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 Globaltek Fabrication Co are associated (or correlated) with Drewloong Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Drewloong Precision has no effect on the direction of Globaltek Fabrication i.e., Globaltek Fabrication and Drewloong Precision go up and down completely randomly.
Pair Corralation between Globaltek Fabrication and Drewloong Precision
Assuming the 90 days trading horizon Globaltek Fabrication is expected to generate 9.15 times less return on investment than Drewloong Precision. But when comparing it to its historical volatility, Globaltek Fabrication Co is 8.92 times less risky than Drewloong Precision. It trades about 0.04 of its potential returns per unit of risk. Drewloong Precision is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,582 in Drewloong Precision on September 2, 2024 and sell it today you would earn a total of 4,768 from holding Drewloong Precision or generate 45.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globaltek Fabrication Co vs. Drewloong Precision
Performance |
| Timeline |
| Globaltek Fabrication |
| Drewloong Precision |
Globaltek Fabrication and Drewloong Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globaltek Fabrication and Drewloong Precision
The main advantage of trading using opposite Globaltek Fabrication and Drewloong Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globaltek Fabrication position performs unexpectedly, Drewloong Precision 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 Drewloong Precision will offset losses from the drop in Drewloong Precision's long position.| Globaltek Fabrication vs. Sunonwealth Electric Machine | Globaltek Fabrication vs. Rechi Precision Co | Globaltek Fabrication vs. Fittech Co | Globaltek Fabrication vs. C Sun Manufacturing |
| Drewloong Precision vs. Zeng Hsing Industrial | Drewloong Precision vs. Fortune Electric Co | Drewloong Precision vs. Allis Electric Co | Drewloong Precision vs. China Ecotek 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |