Correlation Between Grand Fortune and Victory New

Can any of the company-specific risk be diversified away by investing in both Grand Fortune and Victory New 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 Fortune and Victory New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Grand Fortune Securities and Victory New Materials, you can compare the effects of market volatilities on Grand Fortune and Victory New 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 Fortune with a short position of Victory New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Fortune and Victory New.

Diversification Opportunities for Grand Fortune and Victory New

0.56

Correlation Coefficient

Grand Fortune  Victory New

Very weak diversification

The 3 months correlation between Grand and Victory is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Grand Fortune Securities and Victory New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory New Materials and Grand Fortune 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 Fortune Securities are associated (or correlated) with Victory New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory New Materials has no effect on the direction of Grand Fortune i.e., Grand Fortune and Victory New go up and down completely randomly.

Pair Corralation between Grand Fortune and Victory New

Assuming the 90 days trading horizon Grand Fortune Securities is expected to under-perform the Victory New. In addition to that, Grand Fortune is 1.68 times more volatile than Victory New Materials. It trades about -0.3 of its total potential returns per unit of risk. Victory New Materials is currently generating about -0.46 per unit of volatility. If you would invest  1,005  in Victory New Materials on September 19, 2024 and sell it today you would lose (43.00) from holding Victory New Materials or give up 4.28% of portfolio value over 90 days.

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

Grand Fortune Securities  vs.  Victory New Materials

Grand Fortune Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Fortune Securities has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Grand Fortune is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Victory New 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 Fortune and Victory New

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

The idea behind Grand Fortune Securities and Victory New Materials 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.