Correlation Between StShine Optical and Grape King

Can any of the company-specific risk be diversified away by investing in both StShine Optical and Grape King 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 StShine Optical and Grape King into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between StShine Optical Co and Grape King Bio, you can compare the effects of market volatilities on StShine Optical and Grape King 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 StShine Optical with a short position of Grape King. Check out your portfolio center. Please also check ongoing floating volatility patterns of StShine Optical and Grape King.

Diversification Opportunities for StShine Optical and Grape King

0.78

Correlation Coefficient

StShine Optical  Grape King

Poor diversification

The 3 months correlation between StShine and Grape is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding StShine Optical Co and Grape King Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grape King Bio and StShine Optical 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 StShine Optical Co are associated (or correlated) with Grape King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grape King Bio has no effect on the direction of StShine Optical i.e., StShine Optical and Grape King go up and down completely randomly.

Pair Corralation between StShine Optical and Grape King

Assuming the 90 days trading horizon StShine Optical Co is expected to under-perform the Grape King. In addition to that, StShine Optical is 2.68 times more volatile than Grape King Bio. It trades about -0.29 of its total potential returns per unit of risk. Grape King Bio is currently generating about 0.04 per unit of volatility. If you would invest  15,100  in Grape King Bio on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Grape King Bio or generate 0.66% return on investment over 90 days.

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

StShine Optical Co  vs.  Grape King Bio

StShine Optical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in StShine Optical Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, StShine Optical showed solid returns over the last few months and may actually be approaching a breakup point.

Grape King Bio

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grape King Bio are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Grape King 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 StShine Optical and Grape King

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

The idea behind StShine Optical Co and Grape King Bio 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.