Correlation Between Newretail and Grand Ocean
Can any of the company-specific risk be diversified away by investing in both Newretail and Grand Ocean 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 Newretail and Grand Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and Grand Ocean Retail, you can compare the effects of market volatilities on Newretail and Grand Ocean 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 Newretail with a short position of Grand Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and Grand Ocean.
Diversification Opportunities for Newretail and Grand Ocean
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newretail and Grand is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Grand Ocean Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Ocean Retail and Newretail 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 Newretail Co are associated (or correlated) with Grand Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Ocean Retail has no effect on the direction of Newretail i.e., Newretail and Grand Ocean go up and down completely randomly.
Pair Corralation between Newretail and Grand Ocean
Assuming the 90 days trading horizon Newretail Co is expected to generate 0.83 times more return on investment than Grand Ocean. However, Newretail Co is 1.2 times less risky than Grand Ocean. It trades about 0.15 of its potential returns per unit of risk. Grand Ocean Retail is currently generating about 0.03 per unit of risk. If you would invest 2,095 in Newretail Co on August 30, 2024 and sell it today you would earn a total of 500.00 from holding Newretail Co or generate 23.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Newretail Co vs. Grand Ocean Retail
Performance |
| Timeline |
| Newretail |
| Grand Ocean Retail |
Newretail and Grand Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and Grand Ocean
The main advantage of trading using opposite Newretail and Grand Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, Grand Ocean 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 Ocean will offset losses from the drop in Grand Ocean's long position.| Newretail vs. Simple Mart Retail | Newretail vs. Johnson Health Tech | Newretail vs. Pacific Construction Co | Newretail vs. Kindom Construction Corp |
| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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