Correlation Between International CSRC and Grand Plastic

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

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

Diversification Opportunities for International CSRC and Grand Plastic

0.6

Correlation Coefficient

International CSRC  Grand Plastic

Poor diversification

The 3 months correlation between International and Grand is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding International CSRC Investment and Grand Plastic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Plastic Technology and International CSRC 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 International CSRC Investment are associated (or correlated) with Grand Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Plastic Technology has no effect on the direction of International CSRC i.e., International CSRC and Grand Plastic go up and down completely randomly.

Pair Corralation between International CSRC and Grand Plastic

Assuming the 90 days trading horizon International CSRC Investment is expected to under-perform the Grand Plastic. But the stock apears to be less risky and, when comparing its historical volatility, International CSRC Investment is 3.2 times less risky than Grand Plastic. The stock trades about -0.08 of its potential returns per unit of risk. The Grand Plastic Technology is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  22,791  in Grand Plastic Technology on October 11, 2024 and sell it today you would earn a total of  131,209  from holding Grand Plastic Technology or generate 575.71% return on investment over 90 days.

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

International CSRC Investment  vs.  Grand Plastic Technology

International CSRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International CSRC Investment 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.

Grand Plastic Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Plastic Technology 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.

Pair Trading with International CSRC and Grand Plastic

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

The idea behind International CSRC Investment and Grand Plastic Technology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.