Correlation Between Great Computer and Microtips Technology
Can any of the company-specific risk be diversified away by investing in both Great Computer and Microtips 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 Great Computer and Microtips Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Computer and Microtips Technology, you can compare the effects of market volatilities on Great Computer and Microtips 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 Great Computer with a short position of Microtips Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Computer and Microtips Technology.
Diversification Opportunities for Great Computer and Microtips Technology
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and Microtips is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Microtips Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microtips Technology 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 Microtips Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microtips Technology has no effect on the direction of Great Computer i.e., Great Computer and Microtips Technology go up and down completely randomly.
Pair Corralation between Great Computer and Microtips Technology
Assuming the 90 days trading horizon Great Computer is expected to generate 3.39 times more return on investment than Microtips Technology. However, Great Computer is 3.39 times more volatile than Microtips Technology. It trades about 0.01 of its potential returns per unit of risk. Microtips Technology is currently generating about -0.18 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Computer vs. Microtips Technology
Performance |
| Timeline |
| Great Computer |
| Microtips Technology |
Great Computer and Microtips Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Computer and Microtips Technology
The main advantage of trading using opposite Great Computer and Microtips Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Computer position performs unexpectedly, Microtips 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 Microtips Technology will offset losses from the drop in Microtips Technology'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 |
| Microtips Technology vs. Taiwan Semiconductor Manufacturing | Microtips Technology vs. MediaTek | Microtips Technology vs. United Microelectronics | Microtips Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |