Correlation Between EnTie Commercial and Grand Ocean

Can any of the company-specific risk be diversified away by investing in both EnTie Commercial and Grand Ocean 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 Ocean 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 Ocean Retail, you can compare the effects of market volatilities on EnTie Commercial and Grand Ocean 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 Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of EnTie Commercial and Grand Ocean.

Diversification Opportunities for EnTie Commercial and Grand Ocean

0.15

Correlation Coefficient

EnTie Commercial  Grand Ocean

Average diversification

The 3 months correlation between EnTie and Grand is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding EnTie Commercial Bank and Grand Ocean Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Ocean Retail 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 Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Ocean Retail has no effect on the direction of EnTie Commercial i.e., EnTie Commercial and Grand Ocean go up and down completely randomly.

Pair Corralation between EnTie Commercial and Grand Ocean

Assuming the 90 days trading horizon EnTie Commercial is expected to generate 28.08 times less return on investment than Grand Ocean. But when comparing it to its historical volatility, EnTie Commercial Bank is 2.58 times less risky than Grand Ocean. It trades about 0.01 of its potential returns per unit of risk. Grand Ocean Retail is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,185  in Grand Ocean Retail on September 16, 2024 and sell it today you would earn a total of  55.00  from holding Grand Ocean Retail or generate 4.64% return on investment over 90 days.

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

EnTie Commercial Bank  vs.  Grand Ocean Retail

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 Ocean Retail

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Ocean Retail are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Grand Ocean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnTie Commercial and Grand Ocean

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

The idea behind EnTie Commercial Bank and Grand Ocean Retail 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.