Correlation Between GrandTech and Answer Technology
Can any of the company-specific risk be diversified away by investing in both GrandTech and Answer 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 GrandTech and Answer Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GrandTech CG Systems and Answer Technology Co, you can compare the effects of market volatilities on GrandTech and Answer 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 GrandTech with a short position of Answer Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrandTech and Answer Technology.
Diversification Opportunities for GrandTech and Answer Technology
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GrandTech and Answer is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GrandTech CG Systems and Answer Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Answer Technology and GrandTech 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 GrandTech CG Systems are associated (or correlated) with Answer Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Answer Technology has no effect on the direction of GrandTech i.e., GrandTech and Answer Technology go up and down completely randomly.
Pair Corralation between GrandTech and Answer Technology
Assuming the 90 days trading horizon GrandTech CG Systems is expected to under-perform the Answer Technology. In addition to that, GrandTech is 1.3 times more volatile than Answer Technology Co. It trades about -0.27 of its total potential returns per unit of risk. Answer Technology Co is currently generating about 0.0 per unit of volatility. If you would invest 5,090 in Answer Technology Co on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Answer Technology Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GrandTech CG Systems vs. Answer Technology Co
Performance |
| Timeline |
| GrandTech CG Systems |
| Answer Technology |
GrandTech and Answer Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GrandTech and Answer Technology
The main advantage of trading using opposite GrandTech and Answer Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrandTech position performs unexpectedly, Answer 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 Answer Technology will offset losses from the drop in Answer Technology's long position.| GrandTech vs. Jia Jie Biomedical | GrandTech vs. BRIM Biotechnology | GrandTech vs. Onyx Healthcare | GrandTech vs. Genovate Biotechnology Co |
| Answer Technology vs. Xander International | Answer Technology vs. MetaTech AP | Answer Technology vs. Niching Industrial | Answer Technology vs. Sentronic International |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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