Correlation Between Globaltek Fabrication and Highlight Tech
Can any of the company-specific risk be diversified away by investing in both Globaltek Fabrication and Highlight Tech 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 Highlight Tech 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 Highlight Tech, you can compare the effects of market volatilities on Globaltek Fabrication and Highlight Tech 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 Highlight Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globaltek Fabrication and Highlight Tech.
Diversification Opportunities for Globaltek Fabrication and Highlight Tech
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Globaltek and Highlight is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Globaltek Fabrication Co and Highlight Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Tech 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 Highlight Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Tech has no effect on the direction of Globaltek Fabrication i.e., Globaltek Fabrication and Highlight Tech go up and down completely randomly.
Pair Corralation between Globaltek Fabrication and Highlight Tech
Assuming the 90 days trading horizon Globaltek Fabrication Co is expected to generate 1.4 times more return on investment than Highlight Tech. However, Globaltek Fabrication is 1.4 times more volatile than Highlight Tech. It trades about 0.05 of its potential returns per unit of risk. Highlight Tech is currently generating about 0.03 per unit of risk. If you would invest 4,804 in Globaltek Fabrication Co on September 12, 2024 and sell it today you would earn a total of 2,836 from holding Globaltek Fabrication Co or generate 59.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globaltek Fabrication Co vs. Highlight Tech
Performance |
| Timeline |
| Globaltek Fabrication |
| Highlight Tech |
Globaltek Fabrication and Highlight Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globaltek Fabrication and Highlight Tech
The main advantage of trading using opposite Globaltek Fabrication and Highlight Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globaltek Fabrication position performs unexpectedly, Highlight Tech 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 Highlight Tech will offset losses from the drop in Highlight Tech's long position.| Globaltek Fabrication vs. Highlight Tech | Globaltek Fabrication vs. Ruentex Development Co | Globaltek Fabrication vs. WiseChip Semiconductor | Globaltek Fabrication vs. Novatek Microelectronics Corp |
| Highlight Tech vs. Ruentex Development Co | Highlight Tech vs. WiseChip Semiconductor | Highlight Tech vs. Novatek Microelectronics Corp | Highlight Tech vs. Leader Electronics |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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