Correlation Between Great Computer and Voltronic Power

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

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

Diversification Opportunities for Great Computer and Voltronic Power

-0.38

Correlation Coefficient

Great Computer  Voltronic Power

Very good diversification

The 3 months correlation between Great and Voltronic is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Great Computer and Voltronic Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltronic Power Tech and Great Computer 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 Great Computer are associated (or correlated) with Voltronic Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltronic Power Tech has no effect on the direction of Great Computer i.e., Great Computer and Voltronic Power go up and down completely randomly.

Pair Corralation between Great Computer and Voltronic Power

Assuming the 90 days trading horizon Great Computer is expected to generate 1.4 times more return on investment than Voltronic Power. However, Great Computer is 1.4 times more volatile than Voltronic Power Technology. It trades about 0.14 of its potential returns per unit of risk. Voltronic Power Technology is currently generating about -0.04 per unit of risk. If you would invest  1,475  in Great Computer on September 3, 2024 and sell it today you would earn a total of  525.00  from holding Great Computer or generate 35.59% return on investment over 90 days.

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

Great Computer  vs.  Voltronic Power Technology

Great Computer

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Great Computer are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Great Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Voltronic Power Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Voltronic Power Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Great Computer and Voltronic Power

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

The idea behind Great Computer and Voltronic Power Technology 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.