Correlation Between Giant Manufacturing and Sports Gear
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Sports Gear 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 Sports Gear 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 Sports Gear Co, you can compare the effects of market volatilities on Giant Manufacturing and Sports Gear 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 Sports Gear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Sports Gear.
Diversification Opportunities for Giant Manufacturing and Sports Gear
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Giant and Sports is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Sports Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Gear 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 Sports Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Gear has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Sports Gear go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Sports Gear
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Sports Gear. But the stock apears to be less risky and, when comparing its historical volatility, Giant Manufacturing Co is 1.07 times less risky than Sports Gear. The stock trades about -0.02 of its potential returns per unit of risk. The Sports Gear Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,640 in Sports Gear Co on August 29, 2024 and sell it today you would earn a total of 8,360 from holding Sports Gear Co or generate 125.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Sports Gear Co
Performance |
| Timeline |
| Giant Manufacturing |
| Sports Gear |
Giant Manufacturing and Sports Gear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Sports Gear
The main advantage of trading using opposite Giant Manufacturing and Sports Gear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Sports Gear 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 Sports Gear will offset losses from the drop in Sports Gear'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 |
| Sports Gear vs. Feng Tay Enterprises | Sports Gear vs. Pou Chen Corp | Sports Gear vs. Fulgent Sun International | Sports Gear vs. Taiwan Paiho |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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