Correlation Between Goldsun Building and Baotek Industrial
Can any of the company-specific risk be diversified away by investing in both Goldsun Building and Baotek Industrial 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 Baotek Industrial 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 Baotek Industrial Materials, you can compare the effects of market volatilities on Goldsun Building and Baotek Industrial 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 Baotek Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Baotek Industrial.
Diversification Opportunities for Goldsun Building and Baotek Industrial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Goldsun and Baotek is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Baotek Industrial Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baotek Industrial 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 Baotek Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baotek Industrial has no effect on the direction of Goldsun Building i.e., Goldsun Building and Baotek Industrial go up and down completely randomly.
Pair Corralation between Goldsun Building and Baotek Industrial
Assuming the 90 days trading horizon Goldsun Building Materials is expected to generate 0.68 times more return on investment than Baotek Industrial. However, Goldsun Building Materials is 1.47 times less risky than Baotek Industrial. It trades about 0.05 of its potential returns per unit of risk. Baotek Industrial Materials is currently generating about -0.03 per unit of risk. If you would invest 5,240 in Goldsun Building Materials on August 28, 2024 and sell it today you would earn a total of 170.00 from holding Goldsun Building Materials or generate 3.24% 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. Baotek Industrial Materials
Performance |
| Timeline |
| Goldsun Building Mat |
| Baotek Industrial |
Goldsun Building and Baotek Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goldsun Building and Baotek Industrial
The main advantage of trading using opposite Goldsun Building and Baotek Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldsun Building position performs unexpectedly, Baotek Industrial 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 Baotek Industrial will offset losses from the drop in Baotek Industrial's long position.| Goldsun Building vs. Cheng Shin Rubber | Goldsun Building vs. China Steel Chemical | Goldsun Building vs. Yulon Motor Co |
| Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Tainan Spinning Co | Baotek Industrial vs. Shinkong Synthetic Fiber |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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