Correlation Between Greatech Technology and M N

Can any of the company-specific risk be diversified away by investing in both Greatech Technology and M N 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 Greatech Technology and M N into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Greatech Technology Bhd and M N C, you can compare the effects of market volatilities on Greatech Technology and M N 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 Greatech Technology with a short position of M N. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatech Technology and M N.

Diversification Opportunities for Greatech Technology and M N

0.46

Correlation Coefficient

Greatech Technology  M N

Very weak diversification

The 3 months correlation between Greatech and 0103 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Greatech Technology Bhd and M N C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M N C and Greatech Technology 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 Greatech Technology Bhd are associated (or correlated) with M N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M N C has no effect on the direction of Greatech Technology i.e., Greatech Technology and M N go up and down completely randomly.

Pair Corralation between Greatech Technology and M N

Assuming the 90 days trading horizon Greatech Technology is expected to generate 5.78 times less return on investment than M N. But when comparing it to its historical volatility, Greatech Technology Bhd is 3.56 times less risky than M N. It trades about 0.07 of its potential returns per unit of risk. M N C is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7.50  in M N C on September 26, 2024 and sell it today you would earn a total of  3.50  from holding M N C or generate 46.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Greatech Technology Bhd  vs.  M N C

Greatech Technology Bhd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Greatech Technology Bhd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Greatech Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

M N C

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M N C are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, M N disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greatech Technology and M N

The main advantage of trading using opposite Greatech Technology and M N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greatech Technology position performs unexpectedly, M N 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 M N will offset losses from the drop in M N's long position.

The idea behind Greatech Technology Bhd and M N C pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.