Correlation Between Double Bond and Great Computer

Can any of the company-specific risk be diversified away by investing in both Double Bond and Great Computer 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 Double Bond and Great Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Double Bond Chemical and Great Computer, you can compare the effects of market volatilities on Double Bond and Great Computer 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 Double Bond with a short position of Great Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Double Bond and Great Computer.

Diversification Opportunities for Double Bond and Great Computer

-0.6

Correlation Coefficient

Double Bond  Great Computer

Excellent diversification

The 3 months correlation between Double and Great is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Double Bond Chemical and Great Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Computer and Double Bond 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 Double Bond Chemical are associated (or correlated) with Great Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Computer has no effect on the direction of Double Bond i.e., Double Bond and Great Computer go up and down completely randomly.

Pair Corralation between Double Bond and Great Computer

Assuming the 90 days trading horizon Double Bond is expected to generate 5.17 times less return on investment than Great Computer. But when comparing it to its historical volatility, Double Bond Chemical is 4.33 times less risky than Great Computer. It trades about 0.05 of its potential returns per unit of risk. Great Computer is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,575  in Great Computer on October 25, 2024 and sell it today you would earn a total of  220.00  from holding Great Computer or generate 13.97% return on investment over 90 days.

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

Double Bond Chemical  vs.  Great Computer

Double Bond Chemical

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Double Bond Chemical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Double Bond is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Great Computer

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Computer are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Great Computer showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Double Bond and Great Computer

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

The idea behind Double Bond Chemical and Great Computer 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..