Correlation Between Qualipoly Chemical and Grand Pacific

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

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

Diversification Opportunities for Qualipoly Chemical and Grand Pacific

0.02

Correlation Coefficient

Qualipoly Chemical  Grand Pacific

Significant diversification

The 3 months correlation between Qualipoly and Grand is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Qualipoly Chemical Corp 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 Qualipoly Chemical 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 Qualipoly Chemical Corp 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 Qualipoly Chemical i.e., Qualipoly Chemical and Grand Pacific go up and down completely randomly.

Pair Corralation between Qualipoly Chemical and Grand Pacific

Assuming the 90 days trading horizon Qualipoly Chemical Corp is expected to generate 2.31 times more return on investment than Grand Pacific. However, Qualipoly Chemical is 2.31 times more volatile than Grand Pacific Petrochemical. It trades about 0.06 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  4,210  in Qualipoly Chemical Corp on September 5, 2024 and sell it today you would earn a total of  310.00  from holding Qualipoly Chemical Corp or generate 7.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Qualipoly Chemical Corp  vs.  Grand Pacific Petrochemical

Qualipoly Chemical Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Qualipoly Chemical Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Qualipoly Chemical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grand Pacific Petroc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Pacific Petrochemical are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Qualipoly Chemical and Grand Pacific

The main advantage of trading using opposite Qualipoly Chemical and Grand Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qualipoly Chemical 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 Qualipoly Chemical Corp 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.