Correlation Between Grand Pacific and Max Zipper

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

Diversification Opportunities for Grand Pacific and Max Zipper

-0.47

Correlation Coefficient

Grand Pacific  Max Zipper

Very good diversification

The 3 months correlation between Grand and Max is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and Max Zipper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Zipper 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 Max Zipper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Zipper has no effect on the direction of Grand Pacific i.e., Grand Pacific and Max Zipper go up and down completely randomly.

Pair Corralation between Grand Pacific and Max Zipper

Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to under-perform the Max Zipper. But the stock apears to be less risky and, when comparing its historical volatility, Grand Pacific Petrochemical is 2.2 times less risky than Max Zipper. The stock trades about -0.04 of its potential returns per unit of risk. The Max Zipper Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  8,620  in Max Zipper Co on September 25, 2024 and sell it today you would earn a total of  760.00  from holding Max Zipper Co or generate 8.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Grand Pacific Petrochemical  vs.  Max Zipper Co

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 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.

Max Zipper

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Grand Pacific and Max Zipper

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

The idea behind Grand Pacific Petrochemical and Max Zipper Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.