Correlation Between Grand Ocean and Leader Electronics
Can any of the company-specific risk be diversified away by investing in both Grand Ocean and Leader Electronics 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 Leader Electronics 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 Leader Electronics, you can compare the effects of market volatilities on Grand Ocean and Leader Electronics 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 Leader Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Leader Electronics.
Diversification Opportunities for Grand Ocean and Leader Electronics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grand and Leader is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Leader Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leader Electronics 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 Leader Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leader Electronics has no effect on the direction of Grand Ocean i.e., Grand Ocean and Leader Electronics go up and down completely randomly.
Pair Corralation between Grand Ocean and Leader Electronics
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the Leader Electronics. In addition to that, Grand Ocean is 2.12 times more volatile than Leader Electronics. It trades about -0.13 of its total potential returns per unit of risk. Leader Electronics is currently generating about -0.15 per unit of volatility. If you would invest 1,805 in Leader Electronics on August 30, 2024 and sell it today you would lose (105.00) from holding Leader Electronics or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. Leader Electronics
Performance |
| Timeline |
| Grand Ocean Retail |
| Leader Electronics |
Grand Ocean and Leader Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and Leader Electronics
The main advantage of trading using opposite Grand Ocean and Leader Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean position performs unexpectedly, Leader Electronics 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 Leader Electronics will offset losses from the drop in Leader Electronics' 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 |
| Leader Electronics vs. Yulon Motor Co | Leader Electronics vs. Far Eastern Department | Leader Electronics vs. China Steel Corp | Leader Electronics vs. Chang Hwa Commercial |
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 CEOs Directory module to screen CEOs from public companies around the world.
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