Correlation Between Eastern Star and Grand Canal
Can any of the company-specific risk be diversified away by investing in both Eastern Star and Grand Canal 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 Eastern Star and Grand Canal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Star Real and Grand Canal Land, you can compare the effects of market volatilities on Eastern Star and Grand Canal 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 Eastern Star with a short position of Grand Canal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Star and Grand Canal.
Diversification Opportunities for Eastern Star and Grand Canal
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eastern and Grand is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Star Real and Grand Canal Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canal Land and Eastern Star 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 Eastern Star Real are associated (or correlated) with Grand Canal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canal Land has no effect on the direction of Eastern Star i.e., Eastern Star and Grand Canal go up and down completely randomly.
Pair Corralation between Eastern Star and Grand Canal
Assuming the 90 days trading horizon Eastern Star is expected to generate 1.02 times less return on investment than Grand Canal. But when comparing it to its historical volatility, Eastern Star Real is 1.0 times less risky than Grand Canal. It trades about 0.04 of its potential returns per unit of risk. Grand Canal Land is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 219.00 in Grand Canal Land on August 29, 2024 and sell it today you would lose (54.00) from holding Grand Canal Land or give up 24.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Star Real vs. Grand Canal Land
Performance |
| Timeline |
| Eastern Star Real |
| Grand Canal Land |
Eastern Star and Grand Canal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Star and Grand Canal
The main advantage of trading using opposite Eastern Star and Grand Canal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Star position performs unexpectedly, Grand Canal 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 Canal will offset losses from the drop in Grand Canal's long position.| Eastern Star vs. Ananda Development Public | Eastern Star vs. Better World Green | Eastern Star vs. Dcon Products Public |
| Grand Canal vs. Bangkok Land Public | Grand Canal vs. Country Group Development | Grand Canal vs. Eastern Star Real | Grand Canal vs. Amata Public |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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