Correlation Between China General and Grand Pacific
Can any of the company-specific risk be diversified away by investing in both China General 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 China General and Grand Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China General Plastics and Grand Pacific Petrochemical, you can compare the effects of market volatilities on China General 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 China General with a short position of Grand Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of China General and Grand Pacific.
Diversification Opportunities for China General and Grand Pacific
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Grand is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding China General Plastics 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 China General 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 China General Plastics 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 China General i.e., China General and Grand Pacific go up and down completely randomly.
Pair Corralation between China General and Grand Pacific
Assuming the 90 days trading horizon China General Plastics is expected to generate 1.15 times more return on investment than Grand Pacific. However, China General is 1.15 times more volatile than Grand Pacific Petrochemical. It trades about 0.32 of its potential returns per unit of risk. Grand Pacific Petrochemical is currently generating about -0.05 per unit of risk. If you would invest 1,230 in China General Plastics on November 28, 2024 and sell it today you would earn a total of 140.00 from holding China General Plastics or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
China General Plastics vs. Grand Pacific Petrochemical
Performance |
| Timeline |
| China General Plastics |
| Grand Pacific Petroc |
China General and Grand Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China General and Grand Pacific
The main advantage of trading using opposite China General and Grand Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China General 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.| China General vs. Chung Hwa Chemical | China General vs. China Man Made Fiber | China General vs. Sesoda Corp | China General vs. Everlight Chemical Industrial |
| Grand Pacific vs. Taiwan Styrene Monomer | Grand Pacific vs. USI Corp | Grand Pacific vs. China Petrochemical Development | Grand Pacific vs. UPC Technology 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.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |