Correlation Between GFPT Public and Hana Microelectronics
Can any of the company-specific risk be diversified away by investing in both GFPT Public and Hana Microelectronics 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 GFPT Public and Hana Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GFPT Public and Hana Microelectronics Public, you can compare the effects of market volatilities on GFPT Public and Hana Microelectronics 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 GFPT Public with a short position of Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of GFPT Public and Hana Microelectronics.
Diversification Opportunities for GFPT Public and Hana Microelectronics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GFPT and Hana is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding GFPT Public and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and GFPT Public 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 GFPT Public are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of GFPT Public i.e., GFPT Public and Hana Microelectronics go up and down completely randomly.
Pair Corralation between GFPT Public and Hana Microelectronics
Assuming the 90 days trading horizon GFPT Public is expected to generate 0.65 times more return on investment than Hana Microelectronics. However, GFPT Public is 1.54 times less risky than Hana Microelectronics. It trades about 0.01 of its potential returns per unit of risk. Hana Microelectronics Public is currently generating about -0.07 per unit of risk. If you would invest 1,066 in GFPT Public on September 3, 2024 and sell it today you would lose (6.00) from holding GFPT Public or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GFPT Public vs. Hana Microelectronics Public
Performance |
| Timeline |
| GFPT Public |
| Hana Microelectronics |
GFPT Public and Hana Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GFPT Public and Hana Microelectronics
The main advantage of trading using opposite GFPT Public and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GFPT Public position performs unexpectedly, Hana Microelectronics 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 Hana Microelectronics will offset losses from the drop in Hana Microelectronics' long position.| GFPT Public vs. Airports of Thailand | GFPT Public vs. PTT Public | GFPT Public vs. Bangkok Dusit Medical | GFPT Public vs. Kasikornbank Public |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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