Correlation Between Gigabyte Technology and Elitegroup Computer

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

By analyzing existing cross correlation between Gigabyte Technology Co and Elitegroup Computer Systems, you can compare the effects of market volatilities on Gigabyte Technology and Elitegroup Computer 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 Gigabyte Technology with a short position of Elitegroup Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gigabyte Technology and Elitegroup Computer.

Diversification Opportunities for Gigabyte Technology and Elitegroup Computer

-0.21

Correlation Coefficient

Gigabyte Technology  Elitegroup Computer

Very good diversification

The 3 months correlation between Gigabyte and Elitegroup is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Gigabyte Technology Co and Elitegroup Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elitegroup Computer and Gigabyte 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 Gigabyte Technology Co are associated (or correlated) with Elitegroup Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elitegroup Computer has no effect on the direction of Gigabyte Technology i.e., Gigabyte Technology and Elitegroup Computer go up and down completely randomly.

Pair Corralation between Gigabyte Technology and Elitegroup Computer

Assuming the 90 days trading horizon Gigabyte Technology Co is expected to generate 1.19 times more return on investment than Elitegroup Computer. However, Gigabyte Technology is 1.19 times more volatile than Elitegroup Computer Systems. It trades about 0.07 of its potential returns per unit of risk. Elitegroup Computer Systems is currently generating about -0.03 per unit of risk. If you would invest  25,250  in Gigabyte Technology Co on September 12, 2024 and sell it today you would earn a total of  2,150  from holding Gigabyte Technology Co or generate 8.51% return on investment over 90 days.

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

Gigabyte Technology Co  vs.  Elitegroup Computer Systems

Gigabyte Technology

Risk-Adjusted Performance

5 of 100

Modest

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

Elitegroup Computer

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elitegroup Computer Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Elitegroup Computer is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Gigabyte Technology and Elitegroup Computer

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

The idea behind Gigabyte Technology Co and Elitegroup Computer Systems 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.