Correlation Between Everlight Electronics and Grand Pacific

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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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Everlight Electronics Co  vs.  Grand Pacific Petrochemical

 Performance 
       Timeline  
Everlight Electronics 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Everlight Electronics Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Everlight Electronics may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Grand Pacific Petroc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest abnormal performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.
The idea behind Everlight Electronics Co and Grand Pacific Petrochemical 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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