Correlation Between Grand Pacific and TOPBI International

Can any of the company-specific risk be diversified away by investing in both Grand Pacific and TOPBI International 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 Pacific and TOPBI International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grand Pacific Petrochemical and TOPBI International Holdings, you can compare the effects of market volatilities on Grand Pacific and TOPBI International 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 Pacific with a short position of TOPBI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Pacific and TOPBI International.

Diversification Opportunities for Grand Pacific and TOPBI International

-0.68

Correlation Coefficient

Grand Pacific  TOPBI International

Excellent diversification

The 3 months correlation between Grand and TOPBI is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and TOPBI International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPBI International and Grand Pacific 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 Pacific Petrochemical are associated (or correlated) with TOPBI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPBI International has no effect on the direction of Grand Pacific i.e., Grand Pacific and TOPBI International go up and down completely randomly.

Pair Corralation between Grand Pacific and TOPBI International

Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to under-perform the TOPBI International. But the stock apears to be less risky and, when comparing its historical volatility, Grand Pacific Petrochemical is 2.3 times less risky than TOPBI International. The stock trades about -0.29 of its potential returns per unit of risk. The TOPBI International Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,280  in TOPBI International Holdings on October 7, 2024 and sell it today you would earn a total of  120.00  from holding TOPBI International Holdings or generate 9.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Grand Pacific Petrochemical  vs.  TOPBI International Holdings

Grand Pacific Petroc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Pacific Petrochemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

TOPBI International

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TOPBI International Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, TOPBI International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Grand Pacific and TOPBI International

The main advantage of trading using opposite Grand Pacific and TOPBI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Pacific position performs unexpectedly, TOPBI International 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 TOPBI International will offset losses from the drop in TOPBI International's long position.

The idea behind Grand Pacific Petrochemical and TOPBI International Holdings 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.