Correlation Between Alta Equipment and Golden Heaven
Can any of the company-specific risk be diversified away by investing in both Alta Equipment and Golden Heaven 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 Alta Equipment and Golden Heaven into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alta Equipment Group and Golden Heaven Group, you can compare the effects of market volatilities on Alta Equipment and Golden Heaven 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 Alta Equipment with a short position of Golden Heaven. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alta Equipment and Golden Heaven.
Diversification Opportunities for Alta Equipment and Golden Heaven
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alta and Golden is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alta Equipment Group and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group and Alta Equipment 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 Alta Equipment Group are associated (or correlated) with Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Alta Equipment i.e., Alta Equipment and Golden Heaven go up and down completely randomly.
Pair Corralation between Alta Equipment and Golden Heaven
Given the investment horizon of 90 days Alta Equipment is expected to generate 1.3 times less return on investment than Golden Heaven. But when comparing it to its historical volatility, Alta Equipment Group is 1.5 times less risky than Golden Heaven. It trades about 0.24 of its potential returns per unit of risk. Golden Heaven Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 196.00 in Golden Heaven Group on October 24, 2024 and sell it today you would earn a total of 34.00 from holding Golden Heaven Group or generate 17.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alta Equipment Group vs. Golden Heaven Group
Performance |
| Timeline |
| Alta Equipment Group |
| Golden Heaven Group |
Alta Equipment and Golden Heaven Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alta Equipment and Golden Heaven
The main advantage of trading using opposite Alta Equipment and Golden Heaven positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alta Equipment position performs unexpectedly, Golden Heaven 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 Heaven will offset losses from the drop in Golden Heaven's long position.| Alta Equipment vs. PROG Holdings | Alta Equipment vs. GATX Corporation | Alta Equipment vs. McGrath RentCorp | Alta Equipment vs. Custom Truck One |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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