Correlation Between Grand Pacific and USI Corp
Can any of the company-specific risk be diversified away by investing in both Grand Pacific and USI Corp 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 Grand Pacific and USI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Pacific Petrochemical and USI Corp, you can compare the effects of market volatilities on Grand Pacific and USI Corp 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 Grand Pacific with a short position of USI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Pacific and USI Corp.
Diversification Opportunities for Grand Pacific and USI Corp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grand and USI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and USI Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USI Corp and Grand Pacific 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 Grand Pacific Petrochemical are associated (or correlated) with USI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USI Corp has no effect on the direction of Grand Pacific i.e., Grand Pacific and USI Corp go up and down completely randomly.
Pair Corralation between Grand Pacific and USI Corp
Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to under-perform the USI Corp. But the stock apears to be less risky and, when comparing its historical volatility, Grand Pacific Petrochemical is 1.12 times less risky than USI Corp. The stock trades about -0.06 of its potential returns per unit of risk. The USI Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,987 in USI Corp on August 29, 2024 and sell it today you would lose (647.00) from holding USI Corp or give up 32.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Pacific Petrochemical vs. USI Corp
Performance |
| Timeline |
| Grand Pacific Petroc |
| USI Corp |
Grand Pacific and USI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Pacific and USI Corp
The main advantage of trading using opposite Grand Pacific and USI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Pacific position performs unexpectedly, USI Corp 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 USI Corp will offset losses from the drop in USI Corp's long position.| Grand Pacific vs. Cheng Shin Rubber | Grand Pacific vs. China Steel Chemical | Grand Pacific vs. Yulon Motor Co |
| USI Corp vs. Asia Polymer Corp | USI Corp vs. Taiwan Styrene Monomer | USI Corp vs. UPC Technology Corp | USI Corp vs. China Petrochemical Development |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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