Correlation Between Great Computer and Goodway Machine
Can any of the company-specific risk be diversified away by investing in both Great Computer and Goodway Machine 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 Great Computer and Goodway Machine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Computer and Goodway Machine Corp, you can compare the effects of market volatilities on Great Computer and Goodway Machine 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 Great Computer with a short position of Goodway Machine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Computer and Goodway Machine.
Diversification Opportunities for Great Computer and Goodway Machine
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Great and Goodway is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Goodway Machine Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodway Machine Corp and Great Computer 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 Great Computer are associated (or correlated) with Goodway Machine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodway Machine Corp has no effect on the direction of Great Computer i.e., Great Computer and Goodway Machine go up and down completely randomly.
Pair Corralation between Great Computer and Goodway Machine
Assuming the 90 days trading horizon Great Computer is expected to generate 4.37 times more return on investment than Goodway Machine. However, Great Computer is 4.37 times more volatile than Goodway Machine Corp. It trades about 0.01 of its potential returns per unit of risk. Goodway Machine Corp is currently generating about -0.17 per unit of risk. If you would invest 2,025 in Great Computer on September 2, 2024 and sell it today you would lose (25.00) from holding Great Computer or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Computer vs. Goodway Machine Corp
Performance |
| Timeline |
| Great Computer |
| Goodway Machine Corp |
Great Computer and Goodway Machine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Computer and Goodway Machine
The main advantage of trading using opposite Great Computer and Goodway Machine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Computer position performs unexpectedly, Goodway Machine 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 Goodway Machine will offset losses from the drop in Goodway Machine's long position.| Great Computer vs. Airtac International Group | Great Computer vs. TECO Electric Machinery | Great Computer vs. Chung Hsin Electric Machinery | Great Computer vs. King Slide Works |
| Goodway Machine vs. Easywell Biomedicals | Goodway Machine vs. Louisa Professional Coffee | Goodway Machine vs. Great China Metal | Goodway Machine vs. Chailease Holding 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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