Correlation Between Goldsun Building and Universal Textile
Can any of the company-specific risk be diversified away by investing in both Goldsun Building and Universal Textile 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 Goldsun Building and Universal Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldsun Building Materials and Universal Textile Co, you can compare the effects of market volatilities on Goldsun Building and Universal Textile 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 Goldsun Building with a short position of Universal Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Universal Textile.
Diversification Opportunities for Goldsun Building and Universal Textile
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldsun and Universal is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Universal Textile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Textile and Goldsun Building 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 Goldsun Building Materials are associated (or correlated) with Universal Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Textile has no effect on the direction of Goldsun Building i.e., Goldsun Building and Universal Textile go up and down completely randomly.
Pair Corralation between Goldsun Building and Universal Textile
Assuming the 90 days trading horizon Goldsun Building Materials is expected to generate 0.95 times more return on investment than Universal Textile. However, Goldsun Building Materials is 1.05 times less risky than Universal Textile. It trades about 0.11 of its potential returns per unit of risk. Universal Textile Co is currently generating about 0.0 per unit of risk. If you would invest 2,685 in Goldsun Building Materials on August 29, 2024 and sell it today you would earn a total of 2,725 from holding Goldsun Building Materials or generate 101.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.71% |
| Values | Daily Returns |
Goldsun Building Materials vs. Universal Textile Co
Performance |
| Timeline |
| Goldsun Building Mat |
| Universal Textile |
Goldsun Building and Universal Textile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldsun Building and Universal Textile
The main advantage of trading using opposite Goldsun Building and Universal Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldsun Building position performs unexpectedly, Universal Textile 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 Universal Textile will offset losses from the drop in Universal Textile's long position.The idea behind Goldsun Building Materials and Universal Textile 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.| Universal Textile vs. Yulon Finance Corp | Universal Textile vs. Taiwan Secom Co | Universal Textile vs. Pou Chen Corp | Universal Textile vs. Great Wall Enterprise |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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