Correlation Between Est Global and Grand Ocean
Can any of the company-specific risk be diversified away by investing in both Est Global 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 Est Global and Grand Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Est Global Apparel and Grand Ocean Retail, you can compare the effects of market volatilities on Est Global 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 Est Global with a short position of Grand Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Est Global and Grand Ocean.
Diversification Opportunities for Est Global and Grand Ocean
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Est and Grand is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Est Global Apparel 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 Est Global 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 Est Global Apparel 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 Est Global i.e., Est Global and Grand Ocean go up and down completely randomly.
Pair Corralation between Est Global and Grand Ocean
Assuming the 90 days trading horizon Est Global is expected to generate 2.34 times less return on investment than Grand Ocean. But when comparing it to its historical volatility, Est Global Apparel is 1.14 times less risky than Grand Ocean. It trades about 0.03 of its potential returns per unit of risk. Grand Ocean Retail is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,170 in Grand Ocean Retail on September 2, 2024 and sell it today you would earn a total of 55.00 from holding Grand Ocean Retail or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Est Global Apparel vs. Grand Ocean Retail
Performance |
| Timeline |
| Est Global Apparel |
| Grand Ocean Retail |
Est Global and Grand Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Est Global and Grand Ocean
The main advantage of trading using opposite Est Global and Grand Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Est Global 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.| Est Global vs. Far Eastern New | Est Global vs. Eclat Textile Co | Est Global vs. Ruentex Industries | Est Global vs. Formosa Taffeta Co |
| 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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