Correlation Between Grand Plastic and United Orthopedic
Can any of the company-specific risk be diversified away by investing in both Grand Plastic and United Orthopedic 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 Plastic and United Orthopedic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Plastic Technology and United Orthopedic, you can compare the effects of market volatilities on Grand Plastic and United Orthopedic 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 Plastic with a short position of United Orthopedic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Plastic and United Orthopedic.
Diversification Opportunities for Grand Plastic and United Orthopedic
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grand and United is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grand Plastic Technology and United Orthopedic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Orthopedic and Grand Plastic 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 Plastic Technology are associated (or correlated) with United Orthopedic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Orthopedic has no effect on the direction of Grand Plastic i.e., Grand Plastic and United Orthopedic go up and down completely randomly.
Pair Corralation between Grand Plastic and United Orthopedic
Assuming the 90 days trading horizon Grand Plastic Technology is expected to generate 2.43 times more return on investment than United Orthopedic. However, Grand Plastic is 2.43 times more volatile than United Orthopedic. It trades about 0.11 of its potential returns per unit of risk. United Orthopedic is currently generating about -0.05 per unit of risk. If you would invest 156,000 in Grand Plastic Technology on August 30, 2024 and sell it today you would earn a total of 8,500 from holding Grand Plastic Technology or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Plastic Technology vs. United Orthopedic
Performance |
| Timeline |
| Grand Plastic Technology |
| United Orthopedic |
Grand Plastic and United Orthopedic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Plastic and United Orthopedic
The main advantage of trading using opposite Grand Plastic and United Orthopedic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Plastic position performs unexpectedly, United Orthopedic 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 United Orthopedic will offset losses from the drop in United Orthopedic's long position.| Grand Plastic vs. Sino American Silicon Products | Grand Plastic vs. Powertech Technology | Grand Plastic vs. Formosa Sumco Technology | Grand Plastic vs. Radiant Opto Electronics Corp |
| United Orthopedic vs. Phoenix Silicon International | United Orthopedic vs. Standard Chemical Pharmaceutical | United Orthopedic vs. Compal Broadband Networks | United Orthopedic vs. Sunspring Metal 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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