Correlation Between Golden Biotechnology and Hi Clearance
Can any of the company-specific risk be diversified away by investing in both Golden Biotechnology and Hi Clearance 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 Golden Biotechnology and Hi Clearance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Biotechnology and Hi Clearance, you can compare the effects of market volatilities on Golden Biotechnology and Hi Clearance 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 Golden Biotechnology with a short position of Hi Clearance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Biotechnology and Hi Clearance.
Diversification Opportunities for Golden Biotechnology and Hi Clearance
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Golden and 1788 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Hi Clearance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Clearance and Golden Biotechnology 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 Golden Biotechnology are associated (or correlated) with Hi Clearance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Clearance has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Hi Clearance go up and down completely randomly.
Pair Corralation between Golden Biotechnology and Hi Clearance
Assuming the 90 days trading horizon Golden Biotechnology is expected to generate 11.7 times more return on investment than Hi Clearance. However, Golden Biotechnology is 11.7 times more volatile than Hi Clearance. It trades about 0.14 of its potential returns per unit of risk. Hi Clearance is currently generating about 0.17 per unit of risk. If you would invest 1,505 in Golden Biotechnology on November 3, 2024 and sell it today you would earn a total of 140.00 from holding Golden Biotechnology or generate 9.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Biotechnology vs. Hi Clearance
Performance |
| Timeline |
| Golden Biotechnology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hi Clearance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Golden Biotechnology and Hi Clearance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Biotechnology and Hi Clearance
The main advantage of trading using opposite Golden Biotechnology and Hi Clearance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Biotechnology position performs unexpectedly, Hi Clearance 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 Hi Clearance will offset losses from the drop in Hi Clearance's long position.The idea behind Golden Biotechnology and Hi Clearance 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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