Correlation Between Eternal Materials and Goldsun Building
Can any of the company-specific risk be diversified away by investing in both Eternal Materials and Goldsun Building 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 Eternal Materials and Goldsun Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eternal Materials Co and Goldsun Building Materials, you can compare the effects of market volatilities on Eternal Materials and Goldsun Building 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 Eternal Materials with a short position of Goldsun Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eternal Materials and Goldsun Building.
Diversification Opportunities for Eternal Materials and Goldsun Building
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Eternal and Goldsun is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eternal Materials Co and Goldsun Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldsun Building Mat and Eternal Materials 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 Eternal Materials Co are associated (or correlated) with Goldsun Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldsun Building Mat has no effect on the direction of Eternal Materials i.e., Eternal Materials and Goldsun Building go up and down completely randomly.
Pair Corralation between Eternal Materials and Goldsun Building
Assuming the 90 days trading horizon Eternal Materials Co is expected to under-perform the Goldsun Building. But the stock apears to be less risky and, when comparing its historical volatility, Eternal Materials Co is 1.76 times less risky than Goldsun Building. The stock trades about -0.16 of its potential returns per unit of risk. The Goldsun Building Materials is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 5,400 in Goldsun Building Materials on August 30, 2024 and sell it today you would lose (80.00) from holding Goldsun Building Materials or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eternal Materials Co vs. Goldsun Building Materials
Performance |
| Timeline |
| Eternal Materials |
| Goldsun Building Mat |
Eternal Materials and Goldsun Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eternal Materials and Goldsun Building
The main advantage of trading using opposite Eternal Materials and Goldsun Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eternal Materials position performs unexpectedly, Goldsun Building 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 Goldsun Building will offset losses from the drop in Goldsun Building's long position.| Eternal Materials vs. Taiwan Fertilizer Co | Eternal Materials vs. Nan Ya Plastics | Eternal Materials vs. Formosa Chemicals Fibre | Eternal Materials vs. Far Eastern New |
| Goldsun Building vs. Cathay Real Estate | Goldsun Building vs. Huaku Development Co | Goldsun Building vs. BES Engineering Co | Goldsun Building vs. Prince Housing Development |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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