Correlation Between Computer Forms and Greatech Technology

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

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

Diversification Opportunities for Computer Forms and Greatech Technology

-0.4

Correlation Coefficient

Computer Forms  Greatech Technology

Very good diversification

The 3 months correlation between Computer and Greatech is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Computer Forms 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 Computer Forms 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 Computer Forms 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 Computer Forms i.e., Computer Forms and Greatech Technology go up and down completely randomly.

Pair Corralation between Computer Forms and Greatech Technology

Assuming the 90 days trading horizon Computer Forms Bhd is expected to under-perform the Greatech Technology. In addition to that, Computer Forms is 2.85 times more volatile than Greatech Technology Bhd. It trades about -0.09 of its total potential returns per unit of risk. Greatech Technology Bhd is currently generating about 0.0 per unit of volatility. If you would invest  239.00  in Greatech Technology Bhd on September 26, 2024 and sell it today you would lose (11.00) from holding Greatech Technology Bhd or give up 4.6% of portfolio value over 90 days.

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

Computer Forms Bhd  vs.  Greatech Technology Bhd

Computer Forms Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Forms Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Computer Forms 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

5 of 100

Modest

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

Pair Trading with Computer Forms and Greatech Technology

The main advantage of trading using opposite Computer Forms and Greatech Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Computer Forms 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 Computer Forms 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.