Correlation Between Golden Biotechnology and Advanced Lithium
Can any of the company-specific risk be diversified away by investing in both Golden Biotechnology and Advanced Lithium 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 Advanced Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Biotechnology and Advanced Lithium Electrochemistry, you can compare the effects of market volatilities on Golden Biotechnology and Advanced Lithium 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 Advanced Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Biotechnology and Advanced Lithium.
Diversification Opportunities for Golden Biotechnology and Advanced Lithium
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and Advanced is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Advanced Lithium Electrochemis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Lithium Ele 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 Advanced Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Lithium Ele has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Advanced Lithium go up and down completely randomly.
Pair Corralation between Golden Biotechnology and Advanced Lithium
Assuming the 90 days trading horizon Golden Biotechnology is expected to under-perform the Advanced Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Golden Biotechnology is 21.13 times less risky than Advanced Lithium. The stock trades about -0.08 of its potential returns per unit of risk. The Advanced Lithium Electrochemistry is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 8,176 in Advanced Lithium Electrochemistry on September 3, 2024 and sell it today you would lose (4,011) from holding Advanced Lithium Electrochemistry or give up 49.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Golden Biotechnology vs. Advanced Lithium Electrochemis
Performance |
| Timeline |
| Golden Biotechnology |
| Advanced Lithium Ele |
Golden Biotechnology and Advanced Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Biotechnology and Advanced Lithium
The main advantage of trading using opposite Golden Biotechnology and Advanced Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Biotechnology position performs unexpectedly, Advanced Lithium 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 Advanced Lithium will offset losses from the drop in Advanced Lithium's long position.| Golden Biotechnology vs. Grape King Bio | Golden Biotechnology vs. YungShin Global Holding | Golden Biotechnology vs. Standard Chemical Pharmaceutical |
| Advanced Lithium vs. Eclat Textile Co | Advanced Lithium vs. WiseChip Semiconductor | Advanced Lithium vs. Novatek Microelectronics Corp | Advanced Lithium vs. Leader Electronics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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