Correlation Between Great Computer and Ma Kuang
Can any of the company-specific risk be diversified away by investing in both Great Computer and Ma Kuang 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 Ma Kuang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Computer and Ma Kuang Healthcare, you can compare the effects of market volatilities on Great Computer and Ma Kuang 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 Ma Kuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Computer and Ma Kuang.
Diversification Opportunities for Great Computer and Ma Kuang
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and 4139 is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Ma Kuang Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ma Kuang Healthcare 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 Ma Kuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ma Kuang Healthcare has no effect on the direction of Great Computer i.e., Great Computer and Ma Kuang go up and down completely randomly.
Pair Corralation between Great Computer and Ma Kuang
Assuming the 90 days trading horizon Great Computer is expected to generate 3.84 times more return on investment than Ma Kuang. However, Great Computer is 3.84 times more volatile than Ma Kuang Healthcare. It trades about 0.14 of its potential returns per unit of risk. Ma Kuang Healthcare is currently generating about -0.12 per unit of risk. If you would invest 1,680 in Great Computer on August 30, 2024 and sell it today you would earn a total of 265.00 from holding Great Computer or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Computer vs. Ma Kuang Healthcare
Performance |
| Timeline |
| Great Computer |
| Ma Kuang Healthcare |
Great Computer and Ma Kuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Computer and Ma Kuang
The main advantage of trading using opposite Great Computer and Ma Kuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Computer position performs unexpectedly, Ma Kuang 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 Ma Kuang will offset losses from the drop in Ma Kuang's long position.| Great Computer vs. Sports Gear Co | Great Computer vs. Realtek Semiconductor Corp | Great Computer vs. RDC Semiconductor Co | Great Computer vs. WIN Semiconductors |
| Ma Kuang vs. Sunnic Technology Merchandise | Ma Kuang vs. Sun Sea Construction | Ma Kuang vs. Formosa International Hotels | Ma Kuang vs. Hung Sheng Construction |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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