Correlation Between Great China and Advanced Analog
Can any of the company-specific risk be diversified away by investing in both Great China and Advanced Analog 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 Advanced Analog 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 Advanced Analog Technology, you can compare the effects of market volatilities on Great China and Advanced Analog 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 Advanced Analog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great China and Advanced Analog.
Diversification Opportunities for Great China and Advanced Analog
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Great and Advanced is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Great China Metal and Advanced Analog Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Analog Tech 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 Advanced Analog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Analog Tech has no effect on the direction of Great China i.e., Great China and Advanced Analog go up and down completely randomly.
Pair Corralation between Great China and Advanced Analog
Assuming the 90 days trading horizon Great China Metal is expected to generate 0.27 times more return on investment than Advanced Analog. However, Great China Metal is 3.64 times less risky than Advanced Analog. It trades about 0.03 of its potential returns per unit of risk. Advanced Analog Technology is currently generating about -0.11 per unit of risk. If you would invest 2,290 in Great China Metal on September 15, 2024 and sell it today you would earn a total of 5.00 from holding Great China Metal or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Great China Metal vs. Advanced Analog Technology
Performance |
| Timeline |
| Great China Metal |
| Advanced Analog Tech |
Great China and Advanced Analog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great China and Advanced Analog
The main advantage of trading using opposite Great China and Advanced Analog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great China position performs unexpectedly, Advanced Analog 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 Advanced Analog will offset losses from the drop in Advanced Analog'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 |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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