Correlation Between Grand Pacific and Chinese Gamer

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

By analyzing existing cross correlation between Grand Pacific Petrochemical and Chinese Gamer International, you can compare the effects of market volatilities on Grand Pacific and Chinese Gamer 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 Pacific with a short position of Chinese Gamer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Pacific and Chinese Gamer.

Diversification Opportunities for Grand Pacific and Chinese Gamer

0.04

Correlation Coefficient

Grand Pacific  Chinese Gamer

Significant diversification

The 3 months correlation between Grand and Chinese is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grand Pacific Petrochemical and Chinese Gamer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chinese Gamer Intern and Grand Pacific 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 Pacific Petrochemical are associated (or correlated) with Chinese Gamer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chinese Gamer Intern has no effect on the direction of Grand Pacific i.e., Grand Pacific and Chinese Gamer go up and down completely randomly.

Pair Corralation between Grand Pacific and Chinese Gamer

Assuming the 90 days trading horizon Grand Pacific Petrochemical is expected to under-perform the Chinese Gamer. But the stock apears to be less risky and, when comparing its historical volatility, Grand Pacific Petrochemical is 1.3 times less risky than Chinese Gamer. The stock trades about -0.01 of its potential returns per unit of risk. The Chinese Gamer International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,490  in Chinese Gamer International on September 3, 2024 and sell it today you would earn a total of  30.00  from holding Chinese Gamer International or generate 0.67% return on investment over 90 days.

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

Grand Pacific Petrochemical  vs.  Chinese Gamer International

Grand Pacific Petroc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Pacific Petrochemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grand Pacific is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Chinese Gamer Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chinese Gamer International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chinese Gamer 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 Grand Pacific and Chinese Gamer

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

The idea behind Grand Pacific Petrochemical and Chinese Gamer International 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.