Correlation Between Grand Ocean and San Fu

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

Diversification Opportunities for Grand Ocean and San Fu

0.31

Correlation Coefficient

Grand Ocean  San Fu

Weak diversification

The 3 months correlation between Grand and San is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and San Fu Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Fu Chemical 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 San Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Fu Chemical has no effect on the direction of Grand Ocean i.e., Grand Ocean and San Fu go up and down completely randomly.

Pair Corralation between Grand Ocean and San Fu

Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the San Fu. In addition to that, Grand Ocean is 1.16 times more volatile than San Fu Chemical. It trades about -0.12 of its total potential returns per unit of risk. San Fu Chemical is currently generating about 0.04 per unit of volatility. If you would invest  12,700  in San Fu Chemical on October 9, 2024 and sell it today you would earn a total of  450.00  from holding San Fu Chemical or generate 3.54% return on investment over 90 days.

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

Grand Ocean Retail  vs.  San Fu Chemical

Grand Ocean Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Ocean Retail has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

San Fu Chemical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in San Fu Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Fu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Grand Ocean and San Fu

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

The idea behind Grand Ocean Retail and San Fu Chemical 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.