Correlation Between Goldsun Building and Lan Fa
Can any of the company-specific risk be diversified away by investing in both Goldsun Building and Lan Fa 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 Lan Fa 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 Lan Fa Textile, you can compare the effects of market volatilities on Goldsun Building and Lan Fa 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 Lan Fa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Lan Fa.
Diversification Opportunities for Goldsun Building and Lan Fa
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Goldsun and Lan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Lan Fa Textile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lan Fa 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 Lan Fa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lan Fa Textile has no effect on the direction of Goldsun Building i.e., Goldsun Building and Lan Fa go up and down completely randomly.
Pair Corralation between Goldsun Building and Lan Fa
Assuming the 90 days trading horizon Goldsun Building Materials is expected to generate 2.21 times more return on investment than Lan Fa. However, Goldsun Building is 2.21 times more volatile than Lan Fa Textile. It trades about 0.01 of its potential returns per unit of risk. Lan Fa Textile is currently generating about -0.04 per unit of risk. If you would invest 5,230 in Goldsun Building Materials on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Goldsun Building Materials or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldsun Building Materials vs. Lan Fa Textile
Performance |
| Timeline |
| Goldsun Building Mat |
| Lan Fa Textile |
Goldsun Building and Lan Fa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldsun Building and Lan Fa
The main advantage of trading using opposite Goldsun Building and Lan Fa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldsun Building position performs unexpectedly, Lan Fa 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 Lan Fa will offset losses from the drop in Lan Fa's long position.| Goldsun Building vs. Cheng Shin Rubber | Goldsun Building vs. Taiwan Cement Corp | Goldsun Building vs. China Steel Chemical | Goldsun Building vs. Yulon Motor Co |
| Lan Fa vs. Taiwan Semiconductor Manufacturing | Lan Fa vs. Hon Hai Precision | Lan Fa vs. MediaTek | Lan Fa vs. Chunghwa Telecom Co |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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