Correlation Between G J and Grande Asset
Can any of the company-specific risk be diversified away by investing in both G J and Grande Asset 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 G J and Grande Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G J Steel and Grande Asset Hotels, you can compare the effects of market volatilities on G J and Grande Asset 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 G J with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of G J and Grande Asset.
Diversification Opportunities for G J and Grande Asset
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GJS and Grande is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding G J Steel and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and G J 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 G J Steel are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of G J i.e., G J and Grande Asset go up and down completely randomly.
Pair Corralation between G J and Grande Asset
Assuming the 90 days trading horizon G J is expected to generate 11.7 times less return on investment than Grande Asset. But when comparing it to its historical volatility, G J Steel is 2.56 times less risky than Grande Asset. It trades about 0.03 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Grande Asset Hotels on November 27, 2024 and sell it today you would earn a total of 1.00 from holding Grande Asset Hotels or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
G J Steel vs. Grande Asset Hotels
Performance |
| Timeline |
| G J Steel |
| Grande Asset Hotels |
G J and Grande Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G J and Grande Asset
The main advantage of trading using opposite G J and Grande Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G J position performs unexpectedly, Grande Asset 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 Grande Asset will offset losses from the drop in Grande Asset's long position.| G J vs. POSCO Thainox Public | G J vs. Aqua Public | G J vs. Better World Green | G J vs. Eternal Energy Public |
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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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