Correlation Between Minetech Resources and Greatech Technology

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

By analyzing existing cross correlation between Minetech Resources Bhd and Greatech Technology Bhd, you can compare the effects of market volatilities on Minetech Resources and Greatech Technology 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 Minetech Resources with a short position of Greatech Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minetech Resources and Greatech Technology.

Diversification Opportunities for Minetech Resources and Greatech Technology

0.14

Correlation Coefficient

Minetech Resources  Greatech Technology

Average diversification

The 3 months correlation between Minetech and Greatech is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Minetech Resources Bhd and Greatech Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greatech Technology Bhd and Minetech Resources 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 Minetech Resources Bhd are associated (or correlated) with Greatech Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greatech Technology Bhd has no effect on the direction of Minetech Resources i.e., Minetech Resources and Greatech Technology go up and down completely randomly.

Pair Corralation between Minetech Resources and Greatech Technology

Assuming the 90 days trading horizon Minetech Resources Bhd is expected to under-perform the Greatech Technology. In addition to that, Minetech Resources is 1.87 times more volatile than Greatech Technology Bhd. It trades about 0.0 of its total potential returns per unit of risk. Greatech Technology Bhd is currently generating about 0.03 per unit of volatility. If you would invest  221.00  in Greatech Technology Bhd on September 12, 2024 and sell it today you would earn a total of  6.00  from holding Greatech Technology Bhd or generate 2.71% return on investment over 90 days.

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

Minetech Resources Bhd  vs.  Greatech Technology Bhd

Minetech Resources Bhd

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Minetech Resources Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Minetech Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Greatech Technology Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greatech Technology Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Greatech Technology 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 Minetech Resources and Greatech Technology

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

The idea behind Minetech Resources Bhd and Greatech Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.