Correlation Between Drewloong Precision and Globaltek Fabrication
Can any of the company-specific risk be diversified away by investing in both Drewloong Precision and Globaltek Fabrication 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 Drewloong Precision and Globaltek Fabrication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Drewloong Precision and Globaltek Fabrication Co, you can compare the effects of market volatilities on Drewloong Precision and Globaltek Fabrication 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 Drewloong Precision with a short position of Globaltek Fabrication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Drewloong Precision and Globaltek Fabrication.
Diversification Opportunities for Drewloong Precision and Globaltek Fabrication
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Drewloong and Globaltek is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Drewloong Precision and Globaltek Fabrication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globaltek Fabrication and Drewloong Precision 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 Drewloong Precision are associated (or correlated) with Globaltek Fabrication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globaltek Fabrication has no effect on the direction of Drewloong Precision i.e., Drewloong Precision and Globaltek Fabrication go up and down completely randomly.
Pair Corralation between Drewloong Precision and Globaltek Fabrication
Assuming the 90 days trading horizon Drewloong Precision is expected to generate 8.92 times more return on investment than Globaltek Fabrication. However, Drewloong Precision is 8.92 times more volatile than Globaltek Fabrication Co. It trades about 0.04 of its potential returns per unit of risk. Globaltek Fabrication Co is currently generating about 0.04 per unit of risk. 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 |
Drewloong Precision vs. Globaltek Fabrication Co
Performance |
| Timeline |
| Drewloong Precision |
| Globaltek Fabrication |
Drewloong Precision and Globaltek Fabrication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Drewloong Precision and Globaltek Fabrication
The main advantage of trading using opposite Drewloong Precision and Globaltek Fabrication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Drewloong Precision position performs unexpectedly, Globaltek Fabrication 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 Globaltek Fabrication will offset losses from the drop in Globaltek Fabrication's long position.| Drewloong Precision vs. Zeng Hsing Industrial | Drewloong Precision vs. Fortune Electric Co | Drewloong Precision vs. Allis Electric Co | Drewloong Precision vs. China Ecotek Corp |
| Globaltek Fabrication vs. Sunonwealth Electric Machine | Globaltek Fabrication vs. Rechi Precision Co | Globaltek Fabrication vs. Fittech Co | Globaltek Fabrication vs. C Sun Manufacturing |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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