Correlation Between BenQ Materials and Grand Plastic

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

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

Diversification Opportunities for BenQ Materials and Grand Plastic

0.81

Correlation Coefficient

BenQ Materials  Grand Plastic

Very poor diversification

The 3 months correlation between BenQ and Grand is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding BenQ Materials Corp and Grand Plastic Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Plastic Technology and BenQ Materials 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 BenQ Materials Corp are associated (or correlated) with Grand Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Plastic Technology has no effect on the direction of BenQ Materials i.e., BenQ Materials and Grand Plastic go up and down completely randomly.

Pair Corralation between BenQ Materials and Grand Plastic

Assuming the 90 days trading horizon BenQ Materials Corp is expected to generate 0.27 times more return on investment than Grand Plastic. However, BenQ Materials Corp is 3.7 times less risky than Grand Plastic. It trades about -0.14 of its potential returns per unit of risk. Grand Plastic Technology is currently generating about -0.11 per unit of risk. If you would invest  3,060  in BenQ Materials Corp on December 27, 2024 and sell it today you would lose (250.00) from holding BenQ Materials Corp or give up 8.17% of portfolio value over 90 days.

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

BenQ Materials Corp  vs.  Grand Plastic Technology

BenQ Materials Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days BenQ Materials Corp 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.

Grand Plastic Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand Plastic Technology 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 April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BenQ Materials and Grand Plastic

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

The idea behind BenQ Materials Corp and Grand Plastic Technology 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .