Correlation Between Royal Orchid and GMM Grammy

Can any of the company-specific risk be diversified away by investing in both Royal Orchid and GMM Grammy 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 Royal Orchid and GMM Grammy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Royal Orchid Hotel and GMM Grammy Public, you can compare the effects of market volatilities on Royal Orchid and GMM Grammy 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 Royal Orchid with a short position of GMM Grammy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Orchid and GMM Grammy.

Diversification Opportunities for Royal Orchid and GMM Grammy

0.36

Correlation Coefficient

Royal Orchid  GMM Grammy

Weak diversification

The 3 months correlation between Royal and GMM is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Royal Orchid Hotel and GMM Grammy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMM Grammy Public and Royal Orchid 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 Royal Orchid Hotel are associated (or correlated) with GMM Grammy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMM Grammy Public has no effect on the direction of Royal Orchid i.e., Royal Orchid and GMM Grammy go up and down completely randomly.

Pair Corralation between Royal Orchid and GMM Grammy

Assuming the 90 days trading horizon Royal Orchid Hotel is expected to generate 18.56 times more return on investment than GMM Grammy. However, Royal Orchid is 18.56 times more volatile than GMM Grammy Public. It trades about 0.04 of its potential returns per unit of risk. GMM Grammy Public is currently generating about -0.01 per unit of risk. If you would invest  348.00  in Royal Orchid Hotel on October 22, 2024 and sell it today you would lose (165.00) from holding Royal Orchid Hotel or give up 47.41% of portfolio value over 90 days.

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

Royal Orchid Hotel  vs.  GMM Grammy Public

Royal Orchid Hotel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Royal Orchid Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GMM Grammy Public

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Royal Orchid and GMM Grammy

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

The idea behind Royal Orchid Hotel and GMM Grammy Public 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.