Correlation Between Greatech Technology and Sapura Industrial

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

Diversification Opportunities for Greatech Technology and Sapura Industrial

0.33

Correlation Coefficient

Greatech Technology  Sapura Industrial

Weak diversification

The 3 months correlation between Greatech and Sapura is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Greatech Technology Bhd and Sapura Industrial Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapura Industrial 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 Sapura Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapura Industrial Bhd has no effect on the direction of Greatech Technology i.e., Greatech Technology and Sapura Industrial go up and down completely randomly.

Pair Corralation between Greatech Technology and Sapura Industrial

Assuming the 90 days trading horizon Greatech Technology Bhd is expected to under-perform the Sapura Industrial. In addition to that, Greatech Technology is 1.33 times more volatile than Sapura Industrial Bhd. It trades about -0.03 of its total potential returns per unit of risk. Sapura Industrial Bhd is currently generating about 0.0 per unit of volatility. If you would invest  87.00  in Sapura Industrial Bhd on September 26, 2024 and sell it today you would lose (1.00) from holding Sapura Industrial Bhd or give up 1.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Greatech Technology Bhd  vs.  Sapura Industrial 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.

Sapura Industrial Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sapura Industrial Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Sapura Industrial 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 Sapura Industrial

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

The idea behind Greatech Technology Bhd and Sapura Industrial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.