Correlation Between Grand Ocean and Elite Material
Can any of the company-specific risk be diversified away by investing in both Grand Ocean and Elite Material 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 Ocean and Elite Material into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Ocean Retail and Elite Material Co, you can compare the effects of market volatilities on Grand Ocean and Elite Material 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 Ocean with a short position of Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Elite Material.
Diversification Opportunities for Grand Ocean and Elite Material
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Grand and Elite is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material and Grand Ocean 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 Ocean Retail are associated (or correlated) with Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Grand Ocean i.e., Grand Ocean and Elite Material go up and down completely randomly.
Pair Corralation between Grand Ocean and Elite Material
Assuming the 90 days trading horizon Grand Ocean Retail is expected to generate 1.26 times more return on investment than Elite Material. However, Grand Ocean is 1.26 times more volatile than Elite Material Co. It trades about 0.09 of its potential returns per unit of risk. Elite Material Co is currently generating about 0.05 per unit of risk. If you would invest 920.00 in Grand Ocean Retail on September 3, 2024 and sell it today you would earn a total of 355.00 from holding Grand Ocean Retail or generate 38.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. Elite Material Co
Performance |
| Timeline |
| Grand Ocean Retail |
| Elite Material |
Grand Ocean and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and Elite Material
The main advantage of trading using opposite Grand Ocean and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.| Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins Co |
| Elite Material vs. Taiwan Semiconductor Manufacturing | Elite Material vs. Yang Ming Marine | Elite Material vs. ASE Industrial Holding | Elite Material vs. AU Optronics |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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