Correlation Between Global Electrical and Techcom Vietnam

Can any of the company-specific risk be diversified away by investing in both Global Electrical and Techcom Vietnam 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 Global Electrical and Techcom Vietnam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Global Electrical Technology and Techcom Vietnam REIT, you can compare the effects of market volatilities on Global Electrical and Techcom Vietnam 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 Global Electrical with a short position of Techcom Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Electrical and Techcom Vietnam.

Diversification Opportunities for Global Electrical and Techcom Vietnam

0.56

Correlation Coefficient

Global Electrical  Techcom Vietnam

Very weak diversification

The 3 months correlation between Global and Techcom is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global Electrical Technology and Techcom Vietnam REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techcom Vietnam REIT and Global Electrical 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 Global Electrical Technology are associated (or correlated) with Techcom Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techcom Vietnam REIT has no effect on the direction of Global Electrical i.e., Global Electrical and Techcom Vietnam go up and down completely randomly.

Pair Corralation between Global Electrical and Techcom Vietnam

Assuming the 90 days trading horizon Global Electrical Technology is expected to under-perform the Techcom Vietnam. In addition to that, Global Electrical is 1.5 times more volatile than Techcom Vietnam REIT. It trades about -0.06 of its total potential returns per unit of risk. Techcom Vietnam REIT is currently generating about 0.0 per unit of volatility. If you would invest  567,000  in Techcom Vietnam REIT on September 16, 2024 and sell it today you would lose (12,000) from holding Techcom Vietnam REIT or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Global Electrical Technology  vs.  Techcom Vietnam REIT

Global Electrical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Electrical Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Techcom Vietnam REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techcom Vietnam REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Techcom Vietnam is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Global Electrical and Techcom Vietnam

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

The idea behind Global Electrical Technology and Techcom Vietnam REIT 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.