Correlation Between Great China and Integrated Service
Can any of the company-specific risk be diversified away by investing in both Great China and Integrated Service 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 Integrated Service 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 Integrated Service Technology, you can compare the effects of market volatilities on Great China and Integrated Service 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 Integrated Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Integrated Service.
Diversification Opportunities for Great China and Integrated Service
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Integrated is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Integrated Service Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Service 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 Integrated Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Service has no effect on the direction of Great China i.e., Great China and Integrated Service go up and down completely randomly.
Pair Corralation between Great China and Integrated Service
Assuming the 90 days trading horizon Great China Metal is expected to generate 0.17 times more return on investment than Integrated Service. However, Great China Metal is 5.87 times less risky than Integrated Service. It trades about 0.0 of its potential returns per unit of risk. Integrated Service Technology is currently generating about -0.47 per unit of risk. If you would invest 2,290 in Great China Metal on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Great China Metal or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great China Metal vs. Integrated Service Technology
Performance |
| Timeline |
| Great China Metal |
| Integrated Service |
Great China and Integrated Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Integrated Service
The main advantage of trading using opposite Great China and Integrated Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Integrated Service 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 Integrated Service will offset losses from the drop in Integrated Service's long position.| Great China vs. Basso Industry Corp | Great China vs. Chung Hsin Electric Machinery | Great China vs. TYC Brother Industrial | Great China vs. TECO Electric Machinery |
| Integrated Service vs. Standard Foods Corp | Integrated Service vs. Sunny Friend Environmental | Integrated Service vs. Wei Chuan Foods | Integrated Service vs. Wei Chih Steel |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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