Correlation Between Chengdu B and Grandblue Environment

Can any of the company-specific risk be diversified away by investing in both Chengdu B and Grandblue Environment 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 Chengdu B and Grandblue Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chengdu B ray Media and Grandblue Environment Co, you can compare the effects of market volatilities on Chengdu B and Grandblue Environment 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 Chengdu B with a short position of Grandblue Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu B and Grandblue Environment.

Diversification Opportunities for Chengdu B and Grandblue Environment

0.12

Correlation Coefficient

Chengdu B  Grandblue Environment

Average diversification

The 3 months correlation between Chengdu and Grandblue is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu B ray Media and Grandblue Environment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandblue Environment and Chengdu B 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 Chengdu B ray Media are associated (or correlated) with Grandblue Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandblue Environment has no effect on the direction of Chengdu B i.e., Chengdu B and Grandblue Environment go up and down completely randomly.

Pair Corralation between Chengdu B and Grandblue Environment

Assuming the 90 days trading horizon Chengdu B ray Media is expected to under-perform the Grandblue Environment. In addition to that, Chengdu B is 3.6 times more volatile than Grandblue Environment Co. It trades about -0.09 of its total potential returns per unit of risk. Grandblue Environment Co is currently generating about 0.02 per unit of volatility. If you would invest  2,219  in Grandblue Environment Co on October 11, 2024 and sell it today you would earn a total of  9.00  from holding Grandblue Environment Co or generate 0.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Chengdu B ray Media  vs.  Grandblue Environment Co

Chengdu B ray

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chengdu B ray Media are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chengdu B sustained solid returns over the last few months and may actually be approaching a breakup point.

Grandblue Environment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grandblue Environment Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Grandblue Environment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chengdu B and Grandblue Environment

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

The idea behind Chengdu B ray Media and Grandblue Environment Co 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 Transaction History module to view history of all your transactions and understand their impact on performance.