Correlation Between WinMate Communication and Golden Biotechnology
Can any of the company-specific risk be diversified away by investing in both WinMate Communication and Golden Biotechnology 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 WinMate Communication and Golden Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WinMate Communication INC and Golden Biotechnology, you can compare the effects of market volatilities on WinMate Communication and Golden Biotechnology 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 WinMate Communication with a short position of Golden Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of WinMate Communication and Golden Biotechnology.
Diversification Opportunities for WinMate Communication and Golden Biotechnology
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between WinMate and Golden is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding WinMate Communication INC and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Biotechnology and WinMate Communication 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 WinMate Communication INC are associated (or correlated) with Golden Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Biotechnology has no effect on the direction of WinMate Communication i.e., WinMate Communication and Golden Biotechnology go up and down completely randomly.
Pair Corralation between WinMate Communication and Golden Biotechnology
Assuming the 90 days trading horizon WinMate Communication INC is expected to generate 1.03 times more return on investment than Golden Biotechnology. However, WinMate Communication is 1.03 times more volatile than Golden Biotechnology. It trades about -0.29 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.49 per unit of risk. If you would invest 18,000 in WinMate Communication INC on November 5, 2024 and sell it today you would lose (1,350) from holding WinMate Communication INC or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
WinMate Communication INC vs. Golden Biotechnology
Performance |
| Timeline |
| WinMate Communication INC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Golden Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
WinMate Communication and Golden Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WinMate Communication and Golden Biotechnology
The main advantage of trading using opposite WinMate Communication and Golden Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WinMate Communication position performs unexpectedly, Golden Biotechnology 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 Golden Biotechnology will offset losses from the drop in Golden Biotechnology's long position.The idea behind WinMate Communication INC and Golden Biotechnology 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.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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