Correlation Between General Interface and Para Light
Can any of the company-specific risk be diversified away by investing in both General Interface and Para Light 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 General Interface and Para Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Interface Solution and Para Light Electronics, you can compare the effects of market volatilities on General Interface and Para Light 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 General Interface with a short position of Para Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Interface and Para Light.
Diversification Opportunities for General Interface and Para Light
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between General and Para is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding General Interface Solution and Para Light Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Para Light Electronics and General Interface 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 General Interface Solution are associated (or correlated) with Para Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Para Light Electronics has no effect on the direction of General Interface i.e., General Interface and Para Light go up and down completely randomly.
Pair Corralation between General Interface and Para Light
Assuming the 90 days trading horizon General Interface Solution is expected to under-perform the Para Light. In addition to that, General Interface is 2.02 times more volatile than Para Light Electronics. It trades about -0.24 of its total potential returns per unit of risk. Para Light Electronics is currently generating about -0.27 per unit of volatility. If you would invest 1,020 in Para Light Electronics on August 26, 2024 and sell it today you would lose (55.00) from holding Para Light Electronics or give up 5.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Interface Solution vs. Para Light Electronics
Performance |
| Timeline |
| General Interface |
| Para Light Electronics |
General Interface and Para Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Interface and Para Light
The main advantage of trading using opposite General Interface and Para Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Interface position performs unexpectedly, Para Light 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 Para Light will offset losses from the drop in Para Light's long position.| General Interface vs. Novatek Microelectronics Corp | General Interface vs. Quanta Computer | General Interface vs. United Microelectronics |
| Para Light vs. Harvatek Corp | Para Light vs. Bright Led Electronics | Para Light vs. Ledtech Electronics Corp | Para Light vs. Everlight Electronics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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