Correlation Between Great Wall and Advanced Ceramic
Can any of the company-specific risk be diversified away by investing in both Great Wall and Advanced Ceramic 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 Wall and Advanced Ceramic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Wall Enterprise and Advanced Ceramic X, you can compare the effects of market volatilities on Great Wall and Advanced Ceramic 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 Wall with a short position of Advanced Ceramic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Advanced Ceramic.
Diversification Opportunities for Great Wall and Advanced Ceramic
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Great and Advanced is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Advanced Ceramic X in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Ceramic X and Great Wall 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 Wall Enterprise are associated (or correlated) with Advanced Ceramic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Ceramic X has no effect on the direction of Great Wall i.e., Great Wall and Advanced Ceramic go up and down completely randomly.
Pair Corralation between Great Wall and Advanced Ceramic
Assuming the 90 days trading horizon Great Wall is expected to generate 2.13 times less return on investment than Advanced Ceramic. But when comparing it to its historical volatility, Great Wall Enterprise is 3.65 times less risky than Advanced Ceramic. It trades about 0.11 of its potential returns per unit of risk. Advanced Ceramic X is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,250 in Advanced Ceramic X on September 12, 2024 and sell it today you would earn a total of 1,450 from holding Advanced Ceramic X or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Advanced Ceramic X
Performance |
| Timeline |
| Great Wall Enterprise |
| Advanced Ceramic X |
Great Wall and Advanced Ceramic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Advanced Ceramic
The main advantage of trading using opposite Great Wall and Advanced Ceramic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Advanced Ceramic 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 Advanced Ceramic will offset losses from the drop in Advanced Ceramic's long position.| Great Wall vs. Standard Foods Corp | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Ruentex Development Co | Great Wall vs. WiseChip Semiconductor |
| Advanced Ceramic vs. Gemtek Technology Co | Advanced Ceramic vs. Ruentex Development Co | Advanced Ceramic vs. WiseChip Semiconductor | Advanced Ceramic vs. Novatek Microelectronics Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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