Correlation Between Grand Pacific and Chi Sheng

Can any of the company-specific risk be diversified away by investing in both Grand Pacific and Chi Sheng 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 Chi Sheng 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 Chi Sheng Chemical, you can compare the effects of market volatilities on Grand Pacific and Chi Sheng 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 Chi Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Pacific and Chi Sheng.

Diversification Opportunities for Grand Pacific and Chi Sheng

-0.1

Correlation Coefficient

Grand Pacific  Chi Sheng

Good diversification

The 3 months correlation between Grand and Chi is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and Chi Sheng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Sheng Chemical 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 Chi Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Sheng Chemical has no effect on the direction of Grand Pacific i.e., Grand Pacific and Chi Sheng go up and down completely randomly.

Pair Corralation between Grand Pacific and Chi Sheng

Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to under-perform the Chi Sheng. But the stock apears to be less risky and, when comparing its historical volatility, Grand Pacific Petrochemical is 2.07 times less risky than Chi Sheng. The stock trades about -0.05 of its potential returns per unit of risk. The Chi Sheng Chemical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,660  in Chi Sheng Chemical on September 5, 2024 and sell it today you would earn a total of  70.00  from holding Chi Sheng Chemical or generate 2.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.59%
Values	Daily Returns

Grand Pacific Petrochemical  vs.  Chi Sheng Chemical

Grand Pacific Petroc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Pacific Petrochemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Grand Pacific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Chi Sheng Chemical

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chi Sheng Chemical are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chi Sheng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grand Pacific and Chi Sheng

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

The idea behind Grand Pacific Petrochemical and Chi Sheng Chemical 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..