Correlation Between Everlight Electronics and Grand Pacific
Can any of the company-specific risk be diversified away by investing in both Everlight Electronics and Grand Pacific 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 Everlight Electronics and Grand Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everlight Electronics Co and Grand Pacific Petrochemical, you can compare the effects of market volatilities on Everlight Electronics and Grand Pacific 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 Everlight Electronics with a short position of Grand Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everlight Electronics and Grand Pacific.
Diversification Opportunities for Everlight Electronics and Grand Pacific
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Everlight and Grand is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Everlight Electronics Co and Grand Pacific Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Pacific Petroc and Everlight Electronics 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 Everlight Electronics Co are associated (or correlated) with Grand Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Pacific Petroc has no effect on the direction of Everlight Electronics i.e., Everlight Electronics and Grand Pacific go up and down completely randomly.
Pair Corralation between Everlight Electronics and Grand Pacific
Assuming the 90 days trading horizon Everlight Electronics Co is expected to generate 4.91 times more return on investment than Grand Pacific. However, Everlight Electronics is 4.91 times more volatile than Grand Pacific Petrochemical. It trades about 0.19 of its potential returns per unit of risk. Grand Pacific Petrochemical is currently generating about -0.63 per unit of risk. If you would invest 7,820 in Everlight Electronics Co on October 9, 2024 and sell it today you would earn a total of 510.00 from holding Everlight Electronics Co or generate 6.52% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Everlight Electronics Co vs. Grand Pacific Petrochemical
Performance |
Timeline |
Everlight Electronics |
Grand Pacific Petroc |
Everlight Electronics and Grand Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Everlight Electronics and Grand Pacific
The main advantage of trading using opposite Everlight Electronics and Grand Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everlight Electronics position performs unexpectedly, Grand Pacific 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 Pacific will offset losses from the drop in Grand Pacific's long position.Everlight Electronics vs. Holy Stone Enterprise | Everlight Electronics vs. Walsin Technology Corp | Everlight Electronics vs. Yageo Corp | Everlight Electronics vs. HannStar Board Corp |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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