Correlation Between USI Corp and Grand Pacific
Can any of the company-specific risk be diversified away by investing in both USI Corp and Grand Pacific 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 USI Corp and Grand Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USI Corp and Grand Pacific Petrochemical, you can compare the effects of market volatilities on USI Corp and Grand Pacific 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 USI Corp with a short position of Grand Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of USI Corp and Grand Pacific.
Diversification Opportunities for USI Corp and Grand Pacific
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between USI and Grand is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding USI Corp and Grand Pacific Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Pacific Petroc and USI Corp 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 USI Corp are associated (or correlated) with Grand Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Pacific Petroc has no effect on the direction of USI Corp i.e., USI Corp and Grand Pacific go up and down completely randomly.
Pair Corralation between USI Corp and Grand Pacific
Assuming the 90 days trading horizon USI Corp is expected to under-perform the Grand Pacific. In addition to that, USI Corp is 1.11 times more volatile than Grand Pacific Petrochemical. It trades about -0.08 of its total potential returns per unit of risk. Grand Pacific Petrochemical is currently generating about -0.08 per unit of volatility. If you would invest 1,921 in Grand Pacific Petrochemical on August 29, 2024 and sell it today you would lose (741.00) from holding Grand Pacific Petrochemical or give up 38.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
USI Corp vs. Grand Pacific Petrochemical
Performance |
| Timeline |
| USI Corp |
| Grand Pacific Petroc |
USI Corp and Grand Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USI Corp and Grand Pacific
The main advantage of trading using opposite USI Corp and Grand Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USI Corp position performs unexpectedly, Grand Pacific 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 Grand Pacific will offset losses from the drop in Grand Pacific's long position.| USI Corp vs. Asia Polymer Corp | USI Corp vs. Taiwan Styrene Monomer | USI Corp vs. UPC Technology Corp | USI Corp vs. China Petrochemical Development |
| Grand Pacific vs. Cheng Shin Rubber | Grand Pacific vs. China Steel Chemical | Grand Pacific vs. Yulon Motor 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 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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