Correlation Between TWOWAY Communications and Gemtek Technology
Can any of the company-specific risk be diversified away by investing in both TWOWAY Communications and Gemtek 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 TWOWAY Communications and Gemtek Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TWOWAY Communications and Gemtek Technology Co, you can compare the effects of market volatilities on TWOWAY Communications and Gemtek 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 TWOWAY Communications with a short position of Gemtek Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TWOWAY Communications and Gemtek Technology.
Diversification Opportunities for TWOWAY Communications and Gemtek Technology
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TWOWAY and Gemtek is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TWOWAY Communications and Gemtek Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gemtek Technology and TWOWAY Communications 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 TWOWAY Communications are associated (or correlated) with Gemtek Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gemtek Technology has no effect on the direction of TWOWAY Communications i.e., TWOWAY Communications and Gemtek Technology go up and down completely randomly.
Pair Corralation between TWOWAY Communications and Gemtek Technology
Assuming the 90 days trading horizon TWOWAY Communications is expected to under-perform the Gemtek Technology. In addition to that, TWOWAY Communications is 1.07 times more volatile than Gemtek Technology Co. It trades about -0.16 of its total potential returns per unit of risk. Gemtek Technology Co is currently generating about -0.02 per unit of volatility. If you would invest 3,860 in Gemtek Technology Co on September 13, 2024 and sell it today you would lose (405.00) from holding Gemtek Technology Co or give up 10.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TWOWAY Communications vs. Gemtek Technology Co
Performance |
| Timeline |
| TWOWAY Communications |
| Gemtek Technology |
TWOWAY Communications and Gemtek Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TWOWAY Communications and Gemtek Technology
The main advantage of trading using opposite TWOWAY Communications and Gemtek Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TWOWAY Communications position performs unexpectedly, Gemtek 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 Gemtek Technology will offset losses from the drop in Gemtek Technology's long position.| TWOWAY Communications vs. Gemtek Technology Co | TWOWAY Communications vs. Ruentex Development Co | TWOWAY Communications vs. WiseChip Semiconductor | TWOWAY Communications vs. Novatek Microelectronics Corp |
| Gemtek Technology vs. AU Optronics | Gemtek Technology vs. Innolux Corp | Gemtek Technology vs. Ruentex Development Co | Gemtek Technology vs. WiseChip Semiconductor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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