Correlation Between Great Wall and Eagle Cold
Can any of the company-specific risk be diversified away by investing in both Great Wall and Eagle Cold 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 Eagle Cold 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 Eagle Cold Storage, you can compare the effects of market volatilities on Great Wall and Eagle Cold 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 Eagle Cold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Eagle Cold.
Diversification Opportunities for Great Wall and Eagle Cold
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Great and Eagle is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Eagle Cold Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Cold Storage 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 Eagle Cold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Cold Storage has no effect on the direction of Great Wall i.e., Great Wall and Eagle Cold go up and down completely randomly.
Pair Corralation between Great Wall and Eagle Cold
Assuming the 90 days trading horizon Great Wall is expected to generate 2.1 times less return on investment than Eagle Cold. But when comparing it to its historical volatility, Great Wall Enterprise is 1.06 times less risky than Eagle Cold. It trades about 0.04 of its potential returns per unit of risk. Eagle Cold Storage is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,969 in Eagle Cold Storage on September 3, 2024 and sell it today you would earn a total of 991.00 from holding Eagle Cold Storage or generate 50.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Wall Enterprise vs. Eagle Cold Storage
Performance |
| Timeline |
| Great Wall Enterprise |
| Eagle Cold Storage |
Great Wall and Eagle Cold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Wall and Eagle Cold
The main advantage of trading using opposite Great Wall and Eagle Cold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Wall position performs unexpectedly, Eagle Cold 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 Eagle Cold will offset losses from the drop in Eagle Cold's long position.| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
| Eagle Cold vs. Uni President Enterprises Corp | Eagle Cold vs. Lien Hwa Industrial | Eagle Cold vs. Great Wall Enterprise | Eagle Cold vs. Standard Foods 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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