Correlation Between Grand Ocean and Chialin Precision
Can any of the company-specific risk be diversified away by investing in both Grand Ocean and Chialin Precision 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 Chialin Precision 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 Chialin Precision Industrial, you can compare the effects of market volatilities on Grand Ocean and Chialin Precision 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 Chialin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Chialin Precision.
Diversification Opportunities for Grand Ocean and Chialin Precision
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Grand and Chialin is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Chialin Precision Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chialin Precision 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 Chialin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chialin Precision has no effect on the direction of Grand Ocean i.e., Grand Ocean and Chialin Precision go up and down completely randomly.
Pair Corralation between Grand Ocean and Chialin Precision
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the Chialin Precision. In addition to that, Grand Ocean is 1.98 times more volatile than Chialin Precision Industrial. It trades about -0.2 of its total potential returns per unit of risk. Chialin Precision Industrial is currently generating about -0.25 per unit of volatility. If you would invest 9,610 in Chialin Precision Industrial on November 3, 2024 and sell it today you would lose (460.00) from holding Chialin Precision Industrial or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. Chialin Precision Industrial
Performance |
| Timeline |
| Grand Ocean Retail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chialin Precision |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Grand Ocean and Chialin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and Chialin Precision
The main advantage of trading using opposite Grand Ocean and Chialin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean position performs unexpectedly, Chialin Precision 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 Chialin Precision will offset losses from the drop in Chialin Precision's long position.The idea behind Grand Ocean Retail and Chialin Precision Industrial pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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