Correlation Between Grand Investment and Contact Financial

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

By analyzing existing cross correlation between Grand Investment Capital and Contact Financial Holding, you can compare the effects of market volatilities on Grand Investment and Contact Financial 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 Investment with a short position of Contact Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Investment and Contact Financial.

Diversification Opportunities for Grand Investment and Contact Financial

0.58

Correlation Coefficient

Grand Investment  Contact Financial

Very weak diversification

The 3 months correlation between Grand and Contact is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Grand Investment Capital and Contact Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contact Financial Holding and Grand Investment 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 Investment Capital are associated (or correlated) with Contact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contact Financial Holding has no effect on the direction of Grand Investment i.e., Grand Investment and Contact Financial go up and down completely randomly.

Pair Corralation between Grand Investment and Contact Financial

Assuming the 90 days trading horizon Grand Investment Capital is expected to generate 1.69 times more return on investment than Contact Financial. However, Grand Investment is 1.69 times more volatile than Contact Financial Holding. It trades about 0.05 of its potential returns per unit of risk. Contact Financial Holding is currently generating about -0.32 per unit of risk. If you would invest  934.00  in Grand Investment Capital on September 17, 2024 and sell it today you would earn a total of  12.00  from holding Grand Investment Capital or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Grand Investment Capital  vs.  Contact Financial Holding

Grand Investment Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Investment Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Contact Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contact Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Grand Investment and Contact Financial

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

The idea behind Grand Investment Capital and Contact Financial Holding 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.