Correlation Between Choo Bee and Greatech Technology
Can any of the company-specific risk be diversified away by investing in both Choo Bee and Greatech Technology 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 Choo Bee and Greatech Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Choo Bee Metal and Greatech Technology Bhd, you can compare the effects of market volatilities on Choo Bee and Greatech Technology 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 Choo Bee with a short position of Greatech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Choo Bee and Greatech Technology.
Diversification Opportunities for Choo Bee and Greatech Technology
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Choo and Greatech is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Choo Bee Metal and Greatech Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatech Technology Bhd and Choo Bee 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 Choo Bee Metal are associated (or correlated) with Greatech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatech Technology Bhd has no effect on the direction of Choo Bee i.e., Choo Bee and Greatech Technology go up and down completely randomly.
Pair Corralation between Choo Bee and Greatech Technology
Assuming the 90 days trading horizon Choo Bee Metal is expected to under-perform the Greatech Technology. But the stock apears to be less risky and, when comparing its historical volatility, Choo Bee Metal is 1.27 times less risky than Greatech Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Greatech Technology Bhd is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Greatech Technology Bhd on August 30, 2024 and sell it today you would lose (63.00) from holding Greatech Technology Bhd or give up 23.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Choo Bee Metal vs. Greatech Technology Bhd
Performance |
| Timeline |
| Choo Bee Metal |
| Greatech Technology Bhd |
Choo Bee and Greatech Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Choo Bee and Greatech Technology
The main advantage of trading using opposite Choo Bee and Greatech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Choo Bee position performs unexpectedly, Greatech Technology 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 Greatech Technology will offset losses from the drop in Greatech Technology's long position.The idea behind Choo Bee Metal and Greatech Technology Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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