Correlation Between Golden Bridge and Organic Special
Can any of the company-specific risk be diversified away by investing in both Golden Bridge and Organic Special 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 Golden Bridge and Organic Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Bridge Investment and Organic Special Pet, you can compare the effects of market volatilities on Golden Bridge and Organic Special 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 Golden Bridge with a short position of Organic Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and Organic Special.
Diversification Opportunities for Golden Bridge and Organic Special
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Golden and Organic is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and Organic Special Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Special Pet and Golden Bridge 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 Golden Bridge Investment are associated (or correlated) with Organic Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Special Pet has no effect on the direction of Golden Bridge i.e., Golden Bridge and Organic Special go up and down completely randomly.
Pair Corralation between Golden Bridge and Organic Special
Assuming the 90 days trading horizon Golden Bridge Investment is expected to generate 0.8 times more return on investment than Organic Special. However, Golden Bridge Investment is 1.24 times less risky than Organic Special. It trades about -0.08 of its potential returns per unit of risk. Organic Special Pet is currently generating about -0.09 per unit of risk. If you would invest 73,300 in Golden Bridge Investment on October 16, 2024 and sell it today you would lose (30,400) from holding Golden Bridge Investment or give up 41.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Bridge Investment vs. Organic Special Pet
Performance |
| Timeline |
| Golden Bridge Investment |
| Organic Special Pet |
Golden Bridge and Organic Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Bridge and Organic Special
The main advantage of trading using opposite Golden Bridge and Organic Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, Organic Special 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 Organic Special will offset losses from the drop in Organic Special's long position.| Golden Bridge vs. iNtRON Biotechnology | Golden Bridge vs. Nice Information Telecommunication | Golden Bridge vs. Eagle Veterinary Technology | Golden Bridge vs. KG Eco Technology |
| Organic Special vs. Golden Bridge Investment | Organic Special vs. NH Investment Securities | Organic Special vs. Daishin Information Communications | Organic Special vs. Nice Information Telecommunication |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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