Correlation Between Iat Automobile and Goke Microelectronics

Can any of the company-specific risk be diversified away by investing in both Iat Automobile and Goke Microelectronics 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 Iat Automobile and Goke Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Iat Automobile and Goke Microelectronics

0.52

Correlation Coefficient

Iat Automobile  Goke Microelectronics

Very weak diversification

The 3 months correlation between Iat and Goke is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Goke Microelectronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goke Microelectronics and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with Goke Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goke Microelectronics has no effect on the direction of Iat Automobile i.e., Iat Automobile and Goke Microelectronics go up and down completely randomly.

Pair Corralation between Iat Automobile and Goke Microelectronics

Assuming the 90 days trading horizon Iat Automobile Technology is expected to under-perform the Goke Microelectronics. In addition to that, Iat Automobile is 1.23 times more volatile than Goke Microelectronics Co. It trades about -0.07 of its total potential returns per unit of risk. Goke Microelectronics Co is currently generating about 0.13 per unit of volatility. If you would invest  6,699  in Goke Microelectronics Co on September 30, 2024 and sell it today you would earn a total of  439.00  from holding Goke Microelectronics Co or generate 6.55% return on investment over 90 days.

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

Iat Automobile Technology  vs.  Goke Microelectronics Co

Iat Automobile Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goke Microelectronics

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goke Microelectronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Goke Microelectronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iat Automobile and Goke Microelectronics

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

The idea behind Iat Automobile Technology and Goke Microelectronics Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.