Correlation Between Greatech Technology and Axiata Group

Can any of the company-specific risk be diversified away by investing in both Greatech Technology and Axiata Group 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 Axiata Group 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 Axiata Group Bhd, you can compare the effects of market volatilities on Greatech Technology and Axiata Group 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 Axiata Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatech Technology and Axiata Group.

Diversification Opportunities for Greatech Technology and Axiata Group

-0.04

Correlation Coefficient

Greatech Technology  Axiata Group

Good diversification

The 3 months correlation between Greatech and Axiata is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Greatech Technology Bhd and Axiata Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axiata Group Bhd 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 Axiata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axiata Group Bhd has no effect on the direction of Greatech Technology i.e., Greatech Technology and Axiata Group go up and down completely randomly.

Pair Corralation between Greatech Technology and Axiata Group

Assuming the 90 days trading horizon Greatech Technology Bhd is expected to generate 1.32 times more return on investment than Axiata Group. However, Greatech Technology is 1.32 times more volatile than Axiata Group Bhd. It trades about 0.36 of its potential returns per unit of risk. Axiata Group Bhd is currently generating about 0.14 per unit of risk. If you would invest  203.00  in Greatech Technology Bhd on September 28, 2024 and sell it today you would earn a total of  26.00  from holding Greatech Technology Bhd or generate 12.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Greatech Technology Bhd  vs.  Axiata Group Bhd

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.

Axiata Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axiata Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Axiata Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Greatech Technology and Axiata Group

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

The idea behind Greatech Technology Bhd and Axiata Group Bhd 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.