Correlation Between Goldsun Building and Yageo Corp
Can any of the company-specific risk be diversified away by investing in both Goldsun Building and Yageo Corp 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 Yageo Corp 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 Yageo Corp, you can compare the effects of market volatilities on Goldsun Building and Yageo Corp 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 Yageo Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Yageo Corp.
Diversification Opportunities for Goldsun Building and Yageo Corp
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Goldsun and Yageo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Yageo Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yageo Corp 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 Yageo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yageo Corp has no effect on the direction of Goldsun Building i.e., Goldsun Building and Yageo Corp go up and down completely randomly.
Pair Corralation between Goldsun Building and Yageo Corp
Assuming the 90 days trading horizon Goldsun Building Materials is expected to generate 1.04 times more return on investment than Yageo Corp. However, Goldsun Building is 1.04 times more volatile than Yageo Corp. It trades about 0.07 of its potential returns per unit of risk. Yageo Corp is currently generating about 0.02 per unit of risk. If you would invest 2,555 in Goldsun Building Materials on October 11, 2024 and sell it today you would earn a total of 1,790 from holding Goldsun Building Materials or generate 70.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goldsun Building Materials vs. Yageo Corp
Performance |
| Timeline |
| Goldsun Building Mat |
| Yageo Corp |
Goldsun Building and Yageo Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldsun Building and Yageo Corp
The main advantage of trading using opposite Goldsun Building and Yageo Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldsun Building position performs unexpectedly, Yageo Corp 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 Yageo Corp will offset losses from the drop in Yageo Corp's long position.| Goldsun Building vs. Basso Industry Corp | Goldsun Building vs. Chung Hsin Electric Machinery | Goldsun Building vs. TECO Electric Machinery |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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