Correlation Between Great Wall and Oceanic Beverages

Can any of the company-specific risk be diversified away by investing in both Great Wall and Oceanic Beverages 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 Great Wall and Oceanic Beverages into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great Wall Enterprise and Oceanic Beverages Co, you can compare the effects of market volatilities on Great Wall and Oceanic Beverages 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 Great Wall with a short position of Oceanic Beverages. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Wall and Oceanic Beverages.

Diversification Opportunities for Great Wall and Oceanic Beverages

-0.27

Correlation Coefficient

Great Wall  Oceanic Beverages

Very good diversification

The 3 months correlation between Great and Oceanic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Great Wall Enterprise and Oceanic Beverages Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanic Beverages and Great Wall 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 Great Wall Enterprise are associated (or correlated) with Oceanic Beverages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanic Beverages has no effect on the direction of Great Wall i.e., Great Wall and Oceanic Beverages go up and down completely randomly.

Pair Corralation between Great Wall and Oceanic Beverages

Assuming the 90 days trading horizon Great Wall is expected to generate 2.81 times less return on investment than Oceanic Beverages. But when comparing it to its historical volatility, Great Wall Enterprise is 2.69 times less risky than Oceanic Beverages. It trades about 0.07 of its potential returns per unit of risk. Oceanic Beverages Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,200  in Oceanic Beverages Co on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Oceanic Beverages Co or generate 8.33% return on investment over 90 days.

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

Great Wall Enterprise  vs.  Oceanic Beverages Co

Great Wall Enterprise

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Great Wall Enterprise are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Great Wall is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Oceanic Beverages

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oceanic Beverages Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Oceanic Beverages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Great Wall and Oceanic Beverages

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

The idea behind Great Wall Enterprise and Oceanic Beverages Co 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.