Correlation Between Grand Ocean and Li Kang
Can any of the company-specific risk be diversified away by investing in both Grand Ocean and Li Kang 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 Li Kang 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 Li Kang Biomedical, you can compare the effects of market volatilities on Grand Ocean and Li Kang 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 Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and Li Kang.
Diversification Opportunities for Grand Ocean and Li Kang
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grand and 6242 is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical 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 Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of Grand Ocean i.e., Grand Ocean and Li Kang go up and down completely randomly.
Pair Corralation between Grand Ocean and Li Kang
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the Li Kang. In addition to that, Grand Ocean is 1.37 times more volatile than Li Kang Biomedical. It trades about -0.04 of its total potential returns per unit of risk. Li Kang Biomedical is currently generating about 0.01 per unit of volatility. If you would invest 4,189 in Li Kang Biomedical on October 27, 2024 and sell it today you would earn a total of 56.00 from holding Li Kang Biomedical or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Ocean Retail vs. Li Kang Biomedical
Performance |
| Timeline |
| Grand Ocean Retail |
| Li Kang Biomedical |
Grand Ocean and Li Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Ocean and Li Kang
The main advantage of trading using opposite Grand Ocean and Li Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean position performs unexpectedly, Li Kang 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 Li Kang will offset losses from the drop in Li Kang'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 |
| Li Kang vs. WinMate Communication INC | Li Kang vs. U Media Communications | Li Kang vs. Unique Optical Industrial | Li Kang vs. Fu Burg Industrial |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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