Correlation Between Golden Biotechnology and Holiday Entertainment
Can any of the company-specific risk be diversified away by investing in both Golden Biotechnology and Holiday Entertainment 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 Holiday Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Biotechnology and Holiday Entertainment Co, you can compare the effects of market volatilities on Golden Biotechnology and Holiday Entertainment 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 Holiday Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Biotechnology and Holiday Entertainment.
Diversification Opportunities for Golden Biotechnology and Holiday Entertainment
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Golden and Holiday is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Holiday Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Entertainment 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 Holiday Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Entertainment has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Holiday Entertainment go up and down completely randomly.
Pair Corralation between Golden Biotechnology and Holiday Entertainment
Assuming the 90 days trading horizon Golden Biotechnology is expected to under-perform the Holiday Entertainment. In addition to that, Golden Biotechnology is 3.05 times more volatile than Holiday Entertainment Co. It trades about -0.22 of its total potential returns per unit of risk. Holiday Entertainment Co is currently generating about 0.44 per unit of volatility. If you would invest 7,700 in Holiday Entertainment Co on December 6, 2024 and sell it today you would earn a total of 390.00 from holding Holiday Entertainment Co or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Biotechnology vs. Holiday Entertainment Co
Performance |
| Timeline |
| Golden Biotechnology |
| Holiday Entertainment |
Golden Biotechnology and Holiday Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Biotechnology and Holiday Entertainment
The main advantage of trading using opposite Golden Biotechnology and Holiday Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Biotechnology position performs unexpectedly, Holiday Entertainment 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 Holiday Entertainment will offset losses from the drop in Holiday Entertainment's long position.The idea behind Golden Biotechnology and Holiday Entertainment Co 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.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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