Correlation Between CHO Pharma and Grand Plastic
Can any of the company-specific risk be diversified away by investing in both CHO Pharma and Grand Plastic 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 CHO Pharma and Grand Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHO Pharma and Grand Plastic Technology, you can compare the effects of market volatilities on CHO Pharma and Grand Plastic 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 CHO Pharma with a short position of Grand Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHO Pharma and Grand Plastic.
Diversification Opportunities for CHO Pharma and Grand Plastic
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHO and Grand is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CHO Pharma and Grand Plastic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Plastic Technology and CHO Pharma 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 CHO Pharma are associated (or correlated) with Grand Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Plastic Technology has no effect on the direction of CHO Pharma i.e., CHO Pharma and Grand Plastic go up and down completely randomly.
Pair Corralation between CHO Pharma and Grand Plastic
Assuming the 90 days trading horizon CHO Pharma is expected to under-perform the Grand Plastic. But the stock apears to be less risky and, when comparing its historical volatility, CHO Pharma is 1.82 times less risky than Grand Plastic. The stock trades about -0.02 of its potential returns per unit of risk. The Grand Plastic Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 111,766 in Grand Plastic Technology on September 3, 2024 and sell it today you would earn a total of 52,734 from holding Grand Plastic Technology or generate 47.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHO Pharma vs. Grand Plastic Technology
Performance |
| Timeline |
| CHO Pharma |
| Grand Plastic Technology |
CHO Pharma and Grand Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHO Pharma and Grand Plastic
The main advantage of trading using opposite CHO Pharma and Grand Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHO Pharma position performs unexpectedly, Grand Plastic 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 Plastic will offset losses from the drop in Grand Plastic's long position.| CHO Pharma vs. Grand Plastic Technology | CHO Pharma vs. C Media Electronics | CHO Pharma vs. General Plastic Industrial | CHO Pharma vs. Cheng Mei Materials |
| Grand Plastic vs. WIN Semiconductors | Grand Plastic vs. Delta Electronics | Grand Plastic vs. WiseChip Semiconductor | Grand Plastic vs. Novatek Microelectronics Corp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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