Correlation Between Grand Ocean and Alcor Micro

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

Diversification Opportunities for Grand Ocean and Alcor Micro

0.26

Correlation Coefficient

Grand Ocean  Alcor Micro

Modest diversification

The 3 months correlation between Grand and Alcor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Grand Ocean Retail and Alcor Micro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcor Micro 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 Alcor Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcor Micro has no effect on the direction of Grand Ocean i.e., Grand Ocean and Alcor Micro go up and down completely randomly.

Pair Corralation between Grand Ocean and Alcor Micro

Assuming the 90 days trading horizon Grand Ocean Retail is expected to under-perform the Alcor Micro. But the stock apears to be less risky and, when comparing its historical volatility, Grand Ocean Retail is 1.32 times less risky than Alcor Micro. The stock trades about -0.52 of its potential returns per unit of risk. The Alcor Micro is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  14,450  in Alcor Micro on October 12, 2024 and sell it today you would lose (2,250) from holding Alcor Micro or give up 15.57% of portfolio value over 90 days.

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

Grand Ocean Retail  vs.  Alcor Micro

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.

Alcor Micro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alcor Micro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Grand Ocean and Alcor Micro

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

The idea behind Grand Ocean Retail and Alcor Micro 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.