Correlation Between Giant Manufacturing and Nien Made
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Nien Made 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 Nien Made 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 Nien Made Enterprise, you can compare the effects of market volatilities on Giant Manufacturing and Nien Made 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 Nien Made. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Nien Made.
Diversification Opportunities for Giant Manufacturing and Nien Made
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Giant and Nien is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Nien Made Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Made Enterprise 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 Nien Made. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Made Enterprise has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Nien Made go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Nien Made
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Nien Made. But the stock apears to be less risky and, when comparing its historical volatility, Giant Manufacturing Co is 1.09 times less risky than Nien Made. The stock trades about -0.12 of its potential returns per unit of risk. The Nien Made Enterprise is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 35,700 in Nien Made Enterprise on September 2, 2024 and sell it today you would earn a total of 4,300 from holding Nien Made Enterprise or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Nien Made Enterprise
Performance |
| Timeline |
| Giant Manufacturing |
| Nien Made Enterprise |
Giant Manufacturing and Nien Made Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Nien Made
The main advantage of trading using opposite Giant Manufacturing and Nien Made positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Nien Made 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 Nien Made will offset losses from the drop in Nien Made'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 |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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