Correlation Between Great China and Emerging Display
Can any of the company-specific risk be diversified away by investing in both Great China and Emerging Display 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 China and Emerging Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great China Metal and Emerging Display Technologies, you can compare the effects of market volatilities on Great China and Emerging Display 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 China with a short position of Emerging Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Emerging Display.
Diversification Opportunities for Great China and Emerging Display
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Great and Emerging is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Emerging Display Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Display Tec and Great China 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 China Metal are associated (or correlated) with Emerging Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Display Tec has no effect on the direction of Great China i.e., Great China and Emerging Display go up and down completely randomly.
Pair Corralation between Great China and Emerging Display
Assuming the 90 days trading horizon Great China is expected to generate 210.0 times less return on investment than Emerging Display. But when comparing it to its historical volatility, Great China Metal is 4.7 times less risky than Emerging Display. It trades about 0.0 of its potential returns per unit of risk. Emerging Display Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Emerging Display Technologies on November 28, 2024 and sell it today you would earn a total of 530.00 from holding Emerging Display Technologies or generate 22.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Great China Metal vs. Emerging Display Technologies
Performance |
| Timeline |
| Great China Metal |
| Emerging Display Tec |
Great China and Emerging Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Emerging Display
The main advantage of trading using opposite Great China and Emerging Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Emerging Display 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 Emerging Display will offset losses from the drop in Emerging Display's long position.| Great China vs. Taiwan Hon Chuan | Great China vs. Taiwan Secom Co | Great China vs. Taiwan Fu Hsing | Great China vs. Taiwan Shin Kong |
| Emerging Display vs. Microelectronics Technology | Emerging Display vs. Bright Led Electronics | Emerging Display vs. Taiwan Chinsan Electronic | Emerging Display vs. China Petrochemical Development |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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