Correlation Between Grand Pacific and ESUN Financial
Can any of the company-specific risk be diversified away by investing in both Grand Pacific and ESUN Financial 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 ESUN Financial 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 ESUN Financial Holding, you can compare the effects of market volatilities on Grand Pacific and ESUN Financial 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 ESUN Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Pacific and ESUN Financial.
Diversification Opportunities for Grand Pacific and ESUN Financial
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Grand and ESUN is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and ESUN Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESUN Financial Holding 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 ESUN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESUN Financial Holding has no effect on the direction of Grand Pacific i.e., Grand Pacific and ESUN Financial go up and down completely randomly.
Pair Corralation between Grand Pacific and ESUN Financial
Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to under-perform the ESUN Financial. In addition to that, Grand Pacific is 1.14 times more volatile than ESUN Financial Holding. It trades about -0.06 of its total potential returns per unit of risk. ESUN Financial Holding is currently generating about 0.14 per unit of volatility. If you would invest 2,755 in ESUN Financial Holding on December 4, 2024 and sell it today you would earn a total of 190.00 from holding ESUN Financial Holding or generate 6.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Grand Pacific Petrochemical vs. ESUN Financial Holding
Performance |
Timeline |
Grand Pacific Petroc |
ESUN Financial Holding |
Grand Pacific and ESUN Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grand Pacific and ESUN Financial
The main advantage of trading using opposite Grand Pacific and ESUN Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Pacific position performs unexpectedly, ESUN Financial 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 ESUN Financial will offset losses from the drop in ESUN Financial's long position.Grand Pacific vs. Unique Optical Industrial | Grand Pacific vs. Mechema Chemicals Int | Grand Pacific vs. Chialin Precision Industrial | Grand Pacific vs. Singtex Industrial Co |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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