Correlation Between Giant Manufacturing and Alexander Marine
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Alexander Marine 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 Alexander Marine 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 Alexander Marine Co, you can compare the effects of market volatilities on Giant Manufacturing and Alexander Marine 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 Alexander Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Alexander Marine.
Diversification Opportunities for Giant Manufacturing and Alexander Marine
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Giant and Alexander is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Alexander Marine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexander Marine 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 Alexander Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexander Marine has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Alexander Marine go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Alexander Marine
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Alexander Marine. In addition to that, Giant Manufacturing is 1.09 times more volatile than Alexander Marine Co. It trades about -0.47 of its total potential returns per unit of risk. Alexander Marine Co is currently generating about -0.35 per unit of volatility. If you would invest 27,800 in Alexander Marine Co on August 25, 2024 and sell it today you would lose (3,700) from holding Alexander Marine Co or give up 13.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Alexander Marine Co
Performance |
| Timeline |
| Giant Manufacturing |
| Alexander Marine |
Giant Manufacturing and Alexander Marine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Alexander Marine
The main advantage of trading using opposite Giant Manufacturing and Alexander Marine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Alexander Marine 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 Alexander Marine will offset losses from the drop in Alexander Marine'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 |
| Alexander Marine vs. Giant Manufacturing Co | Alexander Marine vs. Johnson Health Tech | Alexander Marine vs. Sports Gear Co | Alexander Marine vs. Power Wind Health |
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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