Correlation Between CKM Building and Grand Fortune

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

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

Diversification Opportunities for CKM Building and Grand Fortune

0.25

Correlation Coefficient

CKM Building  Grand Fortune

Modest diversification

The 3 months correlation between CKM and Grand is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding CKM Building Material and Grand Fortune Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Fortune Securities and CKM Building 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 CKM Building Material are associated (or correlated) with Grand Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Fortune Securities has no effect on the direction of CKM Building i.e., CKM Building and Grand Fortune go up and down completely randomly.

Pair Corralation between CKM Building and Grand Fortune

Assuming the 90 days trading horizon CKM Building Material is expected to under-perform the Grand Fortune. In addition to that, CKM Building is 1.38 times more volatile than Grand Fortune Securities. It trades about 0.0 of its total potential returns per unit of risk. Grand Fortune Securities is currently generating about 0.03 per unit of volatility. If you would invest  1,154  in Grand Fortune Securities on September 19, 2024 and sell it today you would earn a total of  76.00  from holding Grand Fortune Securities or generate 6.59% return on investment over 90 days.

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

CKM Building Material  vs.  Grand Fortune Securities

CKM Building Material

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with CKM Building and Grand Fortune

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

The idea behind CKM Building Material and Grand Fortune Securities 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.