Correlation Between Gemtek Technology and Darfon Electronics
Can any of the company-specific risk be diversified away by investing in both Gemtek Technology and Darfon 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 Gemtek Technology and Darfon Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gemtek Technology Co and Darfon Electronics Corp, you can compare the effects of market volatilities on Gemtek Technology and Darfon 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 Gemtek Technology with a short position of Darfon Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gemtek Technology and Darfon Electronics.
Diversification Opportunities for Gemtek Technology and Darfon Electronics
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gemtek and Darfon is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Gemtek Technology Co and Darfon Electronics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darfon Electronics Corp and Gemtek Technology 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 Gemtek Technology Co are associated (or correlated) with Darfon Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darfon Electronics Corp has no effect on the direction of Gemtek Technology i.e., Gemtek Technology and Darfon Electronics go up and down completely randomly.
Pair Corralation between Gemtek Technology and Darfon Electronics
Assuming the 90 days trading horizon Gemtek Technology Co is expected to generate 0.8 times more return on investment than Darfon Electronics. However, Gemtek Technology Co is 1.25 times less risky than Darfon Electronics. It trades about -0.09 of its potential returns per unit of risk. Darfon Electronics Corp is currently generating about -0.08 per unit of risk. If you would invest 3,650 in Gemtek Technology Co on October 26, 2024 and sell it today you would lose (375.00) from holding Gemtek Technology Co or give up 10.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gemtek Technology Co vs. Darfon Electronics Corp
Performance |
| Timeline |
| Gemtek Technology |
| Darfon Electronics Corp |
Gemtek Technology and Darfon Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gemtek Technology and Darfon Electronics
The main advantage of trading using opposite Gemtek Technology and Darfon Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gemtek Technology position performs unexpectedly, Darfon 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 Darfon Electronics will offset losses from the drop in Darfon Electronics' long position.| Gemtek Technology vs. D Link Corp | Gemtek Technology vs. Sunplus Technology Co | Gemtek Technology vs. Silitech Technology Corp | Gemtek Technology vs. Zinwell |
| Darfon Electronics vs. Cheng Uei Precision | Darfon Electronics vs. Acbel Polytech | Darfon Electronics vs. Inventec Corp | Darfon Electronics vs. Clevo Co |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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