Correlation Between GlobalWafers and Giant Manufacturing
Can any of the company-specific risk be diversified away by investing in both GlobalWafers and Giant Manufacturing 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 GlobalWafers and Giant Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GlobalWafers Co and Giant Manufacturing Co, you can compare the effects of market volatilities on GlobalWafers and Giant Manufacturing 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 GlobalWafers with a short position of Giant Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of GlobalWafers and Giant Manufacturing.
Diversification Opportunities for GlobalWafers and Giant Manufacturing
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GlobalWafers and Giant is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding GlobalWafers Co and Giant Manufacturing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Giant Manufacturing and GlobalWafers 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 GlobalWafers Co are associated (or correlated) with Giant Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Giant Manufacturing has no effect on the direction of GlobalWafers i.e., GlobalWafers and Giant Manufacturing go up and down completely randomly.
Pair Corralation between GlobalWafers and Giant Manufacturing
Assuming the 90 days trading horizon GlobalWafers Co is expected to generate 0.83 times more return on investment than Giant Manufacturing. However, GlobalWafers Co is 1.2 times less risky than Giant Manufacturing. It trades about 0.01 of its potential returns per unit of risk. Giant Manufacturing Co is currently generating about -0.02 per unit of risk. If you would invest 40,783 in GlobalWafers Co on September 13, 2024 and sell it today you would lose (183.00) from holding GlobalWafers Co or give up 0.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GlobalWafers Co vs. Giant Manufacturing Co
Performance |
| Timeline |
| GlobalWafers |
| Giant Manufacturing |
GlobalWafers and Giant Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GlobalWafers and Giant Manufacturing
The main advantage of trading using opposite GlobalWafers and Giant Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GlobalWafers position performs unexpectedly, Giant Manufacturing 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 Giant Manufacturing will offset losses from the drop in Giant Manufacturing's long position.| GlobalWafers vs. AU Optronics | GlobalWafers vs. Innolux Corp | GlobalWafers vs. Ruentex Development Co | GlobalWafers vs. WiseChip Semiconductor |
| Giant Manufacturing vs. Feng Tay Enterprises | Giant Manufacturing vs. Ruentex Development Co | Giant Manufacturing vs. WiseChip Semiconductor | Giant Manufacturing vs. Novatek 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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