Correlation Between Giant Manufacturing and Topkey Corp
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Topkey Corp 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 Giant Manufacturing and Topkey Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Topkey Corp, you can compare the effects of market volatilities on Giant Manufacturing and Topkey Corp 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 Giant Manufacturing with a short position of Topkey Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Topkey Corp.
Diversification Opportunities for Giant Manufacturing and Topkey Corp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Giant and Topkey is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Topkey Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Topkey Corp and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Topkey Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Topkey Corp has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Topkey Corp go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Topkey Corp
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Topkey Corp. But the stock apears to be less risky and, when comparing its historical volatility, Giant Manufacturing Co is 1.14 times less risky than Topkey Corp. The stock trades about -0.37 of its potential returns per unit of risk. The Topkey Corp is currently generating about -0.26 of returns per unit of risk over similar time horizon. If you would invest 22,800 in Topkey Corp on August 29, 2024 and sell it today you would lose (2,950) from holding Topkey Corp or give up 12.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Topkey Corp
Performance |
| Timeline |
| Giant Manufacturing |
| Topkey Corp |
Giant Manufacturing and Topkey Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Topkey Corp
The main advantage of trading using opposite Giant Manufacturing and Topkey Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Topkey Corp 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 Topkey Corp will offset losses from the drop in Topkey Corp's long position.| Giant Manufacturing vs. Merida Industry Co | Giant Manufacturing vs. President Chain Store | Giant Manufacturing vs. Cheng Shin Rubber | Giant Manufacturing vs. Uni President Enterprises Corp |
| Topkey Corp vs. Feng Tay Enterprises | Topkey Corp vs. Ruentex Materials Co | Topkey Corp vs. Symtek Automation Asia | Topkey Corp vs. CTCI 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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