Correlation Between Radiant Opto and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Radiant Opto and Greatek 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 Radiant Opto and Greatek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radiant Opto Electronics Corp and Greatek Electronics, you can compare the effects of market volatilities on Radiant Opto and Greatek 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 Radiant Opto with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Opto and Greatek Electronics.
Diversification Opportunities for Radiant Opto and Greatek Electronics
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Radiant and Greatek is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Opto Electronics Corp and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Radiant Opto 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 Radiant Opto Electronics Corp are associated (or correlated) with Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Radiant Opto i.e., Radiant Opto and Greatek Electronics go up and down completely randomly.
Pair Corralation between Radiant Opto and Greatek Electronics
Assuming the 90 days trading horizon Radiant Opto Electronics Corp is expected to generate 1.4 times more return on investment than Greatek Electronics. However, Radiant Opto is 1.4 times more volatile than Greatek Electronics. It trades about -0.01 of its potential returns per unit of risk. Greatek Electronics is currently generating about -0.05 per unit of risk. If you would invest 20,100 in Radiant Opto Electronics Corp on September 1, 2024 and sell it today you would lose (1,050) from holding Radiant Opto Electronics Corp or give up 5.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Radiant Opto Electronics Corp vs. Greatek Electronics
Performance |
| Timeline |
| Radiant Opto Electro |
| Greatek Electronics |
Radiant Opto and Greatek Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Radiant Opto and Greatek Electronics
The main advantage of trading using opposite Radiant Opto and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radiant Opto position performs unexpectedly, Greatek 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' long position.The idea behind Radiant Opto Electronics Corp and Greatek Electronics 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.| Greatek Electronics vs. King Yuan Electronics | Greatek Electronics vs. Powertech Technology | Greatek Electronics vs. Realtek Semiconductor Corp | Greatek Electronics vs. Elan Microelectronics Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |