Correlation Between Greatek Electronics and TSRC Corp

Can any of the company-specific risk be diversified away by investing in both Greatek Electronics and TSRC Corp 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 Greatek Electronics and TSRC Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Greatek Electronics and TSRC Corp, you can compare the effects of market volatilities on Greatek Electronics and TSRC Corp 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 Greatek Electronics with a short position of TSRC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greatek Electronics and TSRC Corp.

Diversification Opportunities for Greatek Electronics and TSRC Corp

0.27

Correlation Coefficient

Greatek Electronics  TSRC Corp

Modest diversification

The 3 months correlation between Greatek and TSRC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Greatek Electronics and TSRC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TSRC Corp and Greatek Electronics 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 Greatek Electronics are associated (or correlated) with TSRC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TSRC Corp has no effect on the direction of Greatek Electronics i.e., Greatek Electronics and TSRC Corp go up and down completely randomly.

Pair Corralation between Greatek Electronics and TSRC Corp

Assuming the 90 days trading horizon Greatek Electronics is expected to under-perform the TSRC Corp. But the stock apears to be less risky and, when comparing its historical volatility, Greatek Electronics is 1.04 times less risky than TSRC Corp. The stock trades about -0.02 of its potential returns per unit of risk. The TSRC Corp is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,430  in TSRC Corp on September 12, 2024 and sell it today you would lose (215.00) from holding TSRC Corp or give up 8.85% of portfolio value over 90 days.

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

Greatek Electronics  vs.  TSRC Corp

Greatek Electronics

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greatek Electronics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Greatek Electronics is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

TSRC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TSRC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, TSRC Corp 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 Greatek Electronics and TSRC Corp

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

The idea behind Greatek Electronics and TSRC Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.