Correlation Between Polytronics Technology and Greatek Electronics
Can any of the company-specific risk be diversified away by investing in both Polytronics Technology and Greatek Electronics 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 Polytronics Technology and Greatek Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Polytronics Technology Corp and Greatek Electronics, you can compare the effects of market volatilities on Polytronics Technology and Greatek Electronics 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 Polytronics Technology with a short position of Greatek Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polytronics Technology and Greatek Electronics.
Diversification Opportunities for Polytronics Technology and Greatek Electronics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Polytronics and Greatek is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Polytronics Technology Corp and Greatek Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatek Electronics and Polytronics 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 Polytronics Technology Corp are associated (or correlated) with Greatek Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatek Electronics has no effect on the direction of Polytronics Technology i.e., Polytronics Technology and Greatek Electronics go up and down completely randomly.
Pair Corralation between Polytronics Technology and Greatek Electronics
Assuming the 90 days trading horizon Polytronics Technology Corp is expected to under-perform the Greatek Electronics. In addition to that, Polytronics Technology is 3.56 times more volatile than Greatek Electronics. It trades about -0.01 of its total potential returns per unit of risk. Greatek Electronics is currently generating about -0.01 per unit of volatility. If you would invest 5,770 in Greatek Electronics on September 14, 2024 and sell it today you would lose (50.00) from holding Greatek Electronics or give up 0.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
Polytronics Technology Corp vs. Greatek Electronics
Performance |
Timeline |
Polytronics Technology |
Greatek Electronics |
Polytronics Technology and Greatek Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Polytronics Technology and Greatek Electronics
The main advantage of trading using opposite Polytronics Technology and Greatek Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polytronics Technology position performs unexpectedly, Greatek Electronics 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 Greatek Electronics will offset losses from the drop in Greatek Electronics' long position.Polytronics Technology vs. AU Optronics | Polytronics Technology vs. Innolux Corp | Polytronics Technology vs. Ruentex Development Co | Polytronics Technology vs. WiseChip Semiconductor |
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Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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