Correlation Between Advanced Braking and Gold Road
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Gold Road 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 Advanced Braking and Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Gold Road Resources, you can compare the effects of market volatilities on Advanced Braking and Gold Road 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 Advanced Braking with a short position of Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Gold Road.
Diversification Opportunities for Advanced Braking and Gold Road
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Advanced and Gold is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Advanced Braking i.e., Advanced Braking and Gold Road go up and down completely randomly.
Pair Corralation between Advanced Braking and Gold Road
Assuming the 90 days trading horizon Advanced Braking Technology is expected to generate 1.05 times more return on investment than Gold Road. However, Advanced Braking is 1.05 times more volatile than Gold Road Resources. It trades about 0.12 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.01 per unit of risk. If you would invest 4.30 in Advanced Braking Technology on August 29, 2024 and sell it today you would earn a total of 4.60 from holding Advanced Braking Technology or generate 106.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Advanced Braking Technology vs. Gold Road Resources
Performance |
| Timeline |
| Advanced Braking Tec |
| Gold Road Resources |
Advanced Braking and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Gold Road
The main advantage of trading using opposite Advanced Braking and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Advanced Braking vs. Summit Resources Limited | Advanced Braking vs. Champion Iron | Advanced Braking vs. Ridley | Advanced Braking vs. Peel Mining |
| Gold Road vs. Northern Star Resources | Gold Road vs. Evolution Mining | Gold Road vs. Bluescope Steel | Gold Road vs. Sandfire Resources NL |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |