Correlation Between Grand Pacific and Mechema Chemicals
Can any of the company-specific risk be diversified away by investing in both Grand Pacific and Mechema Chemicals 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 Mechema Chemicals 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 Mechema Chemicals Int, you can compare the effects of market volatilities on Grand Pacific and Mechema Chemicals 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 Mechema Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Pacific and Mechema Chemicals.
Diversification Opportunities for Grand Pacific and Mechema Chemicals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Grand and Mechema is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and Mechema Chemicals Int in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechema Chemicals Int 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 Mechema Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechema Chemicals Int has no effect on the direction of Grand Pacific i.e., Grand Pacific and Mechema Chemicals go up and down completely randomly.
Pair Corralation between Grand Pacific and Mechema Chemicals
Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to generate 0.41 times more return on investment than Mechema Chemicals. However, Grand Pacific Petrochemical is 2.44 times less risky than Mechema Chemicals. It trades about 0.03 of its potential returns per unit of risk. Mechema Chemicals Int is currently generating about -0.03 per unit of risk. If you would invest 2,330 in Grand Pacific Petrochemical on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Grand Pacific Petrochemical or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Pacific Petrochemical vs. Mechema Chemicals Int
Performance |
| Timeline |
| Grand Pacific Petroc |
| Mechema Chemicals Int |
Grand Pacific and Mechema Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Pacific and Mechema Chemicals
The main advantage of trading using opposite Grand Pacific and Mechema Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Pacific position performs unexpectedly, Mechema Chemicals 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 Mechema Chemicals will offset losses from the drop in Mechema Chemicals' long position.| Grand Pacific vs. Tehmag Foods | Grand Pacific vs. Hi Lai Foods Co | Grand Pacific vs. Mechema Chemicals Int | Grand Pacific vs. Lian Hwa Foods |
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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 Stocks Directory module to find actively traded stocks across global markets.
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