Correlation Between Oceanic Beverages and Great Wall
Can any of the company-specific risk be diversified away by investing in both Oceanic Beverages and Great Wall 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 Oceanic Beverages and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanic Beverages Co and Great Wall Enterprise, you can compare the effects of market volatilities on Oceanic Beverages and Great Wall 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 Oceanic Beverages with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Beverages and Great Wall.
Diversification Opportunities for Oceanic Beverages and Great Wall
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oceanic and Great is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and Great Wall Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Enterprise and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Enterprise has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and Great Wall go up and down completely randomly.
Pair Corralation between Oceanic Beverages and Great Wall
Assuming the 90 days trading horizon Oceanic Beverages Co is expected to generate 2.45 times more return on investment than Great Wall. However, Oceanic Beverages is 2.45 times more volatile than Great Wall Enterprise. It trades about 0.18 of its potential returns per unit of risk. Great Wall Enterprise is currently generating about -0.05 per unit of risk. If you would invest 715.00 in Oceanic Beverages Co on September 1, 2024 and sell it today you would earn a total of 485.00 from holding Oceanic Beverages Co or generate 67.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Oceanic Beverages Co vs. Great Wall Enterprise
Performance |
| Timeline |
| Oceanic Beverages |
| Great Wall Enterprise |
Oceanic Beverages and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanic Beverages and Great Wall
The main advantage of trading using opposite Oceanic Beverages and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Beverages position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.| Oceanic Beverages vs. De Licacy Industrial | Oceanic Beverages vs. Wisher Industrial Co | Oceanic Beverages vs. Tainan Enterprises Co |
| Great Wall vs. De Licacy Industrial | Great Wall vs. Wisher Industrial Co | Great Wall vs. Tainan Enterprises Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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