Correlation Between Grand Ocean and China Development
Can any of the company-specific risk be diversified away by investing in both Grand Ocean and China Development 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 Grand Ocean and China Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Ocean Retail and China Development Financial, you can compare the effects of market volatilities on Grand Ocean and China Development 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 Grand Ocean with a short position of China Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Ocean and China Development.
Diversification Opportunities for Grand Ocean and China Development
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Grand and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and China Development Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Development and Grand Ocean 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 Grand Ocean Retail are associated (or correlated) with China Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Development has no effect on the direction of Grand Ocean i.e., Grand Ocean and China Development go up and down completely randomly.
Pair Corralation between Grand Ocean and China Development
Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the China Development. In addition to that, Grand Ocean is 1.44 times more volatile than China Development Financial. It trades about -0.14 of its total potential returns per unit of risk. China Development Financial is currently generating about 0.37 per unit of volatility. If you would invest 1,700 in China Development Financial on December 5, 2024 and sell it today you would earn a total of 120.00 from holding China Development Financial or generate 7.06% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Grand Ocean Retail vs. China Development Financial
Performance |
Timeline |
Grand Ocean Retail |
China Development |
Grand Ocean and China Development Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Grand Ocean and China Development
The main advantage of trading using opposite Grand Ocean and China Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Ocean position performs unexpectedly, China Development 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 China Development will offset losses from the drop in China Development's long position.Grand Ocean vs. First Steamship Co | Grand Ocean vs. Far Eastern Department | Grand Ocean vs. LongDa Construction Development | Grand Ocean vs. Collins Co |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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