Correlation Between First Hotel and Grand Plastic
Can any of the company-specific risk be diversified away by investing in both First Hotel and Grand Plastic 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 First Hotel and Grand Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and Grand Plastic Technology, you can compare the effects of market volatilities on First Hotel and Grand Plastic 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 First Hotel with a short position of Grand Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Grand Plastic.
Diversification Opportunities for First Hotel and Grand Plastic
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Grand is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co and Grand Plastic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Plastic Technology and First Hotel 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 First Hotel Co are associated (or correlated) with Grand Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Plastic Technology has no effect on the direction of First Hotel i.e., First Hotel and Grand Plastic go up and down completely randomly.
Pair Corralation between First Hotel and Grand Plastic
Assuming the 90 days trading horizon First Hotel Co is expected to under-perform the Grand Plastic. But the stock apears to be less risky and, when comparing its historical volatility, First Hotel Co is 5.54 times less risky than Grand Plastic. The stock trades about -0.24 of its potential returns per unit of risk. The Grand Plastic Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 173,000 in Grand Plastic Technology on September 13, 2024 and sell it today you would earn a total of 4,000 from holding Grand Plastic Technology or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. Grand Plastic Technology
Performance |
| Timeline |
| First Hotel |
| Grand Plastic Technology |
First Hotel and Grand Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and Grand Plastic
The main advantage of trading using opposite First Hotel and Grand Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel position performs unexpectedly, Grand Plastic 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 Plastic will offset losses from the drop in Grand Plastic's long position.| First Hotel vs. Feng Tay Enterprises | First Hotel vs. Ruentex Development Co | First Hotel vs. WiseChip Semiconductor | First Hotel vs. Novatek Microelectronics Corp |
| Grand Plastic vs. First Hotel Co | Grand Plastic vs. Cowealth Medical Holding | Grand Plastic vs. Formosa International Hotels | Grand Plastic vs. HOYA Resort Hotel |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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