Correlation Between EnTie Commercial and Grand Pacific

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

By analyzing existing cross correlation between EnTie Commercial Bank and Grand Pacific Petrochemical, you can compare the effects of market volatilities on EnTie Commercial 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 EnTie Commercial with a short position of Grand Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnTie Commercial and Grand Pacific.

Diversification Opportunities for EnTie Commercial and Grand Pacific

0.13

Correlation Coefficient

EnTie Commercial  Grand Pacific

Average diversification

The 3 months correlation between EnTie and Grand is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank 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 EnTie Commercial 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 EnTie Commercial Bank 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 EnTie Commercial i.e., EnTie Commercial and Grand Pacific go up and down completely randomly.

Pair Corralation between EnTie Commercial and Grand Pacific

Assuming the 90 days trading horizon EnTie Commercial Bank is expected to generate 1.47 times more return on investment than Grand Pacific. However, EnTie Commercial is 1.47 times more volatile than Grand Pacific Petrochemical. It trades about 0.0 of its potential returns per unit of risk. Grand Pacific Petrochemical is currently generating about -0.02 per unit of risk. If you would invest  1,415  in EnTie Commercial Bank on September 14, 2024 and sell it today you would lose (5.00) from holding EnTie Commercial Bank or give up 0.35% of portfolio value over 90 days.

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

EnTie Commercial Bank  vs.  Grand Pacific Petrochemical

EnTie Commercial Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnTie Commercial Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, EnTie Commercial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with EnTie Commercial and Grand Pacific

The main advantage of trading using opposite EnTie Commercial and Grand Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EnTie Commercial 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 EnTie Commercial Bank 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..