Correlation Between American Acquisition and Golden Star
Can any of the company-specific risk be diversified away by investing in both American Acquisition and Golden Star 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 American Acquisition and Golden Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Acquisition Opportunity and Golden Star Acquisition, you can compare the effects of market volatilities on American Acquisition and Golden Star 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 American Acquisition with a short position of Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Acquisition and Golden Star.
Diversification Opportunities for American Acquisition and Golden Star
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between American and Golden is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding American Acquisition Opportuni and Golden Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Acquisition and American Acquisition 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 American Acquisition Opportunity are associated (or correlated) with Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Acquisition has no effect on the direction of American Acquisition i.e., American Acquisition and Golden Star go up and down completely randomly.
Pair Corralation between American Acquisition and Golden Star
Given the investment horizon of 90 days American Acquisition Opportunity is expected to generate 0.4 times more return on investment than Golden Star. However, American Acquisition Opportunity is 2.53 times less risky than Golden Star. It trades about 0.09 of its potential returns per unit of risk. Golden Star Acquisition is currently generating about 0.03 per unit of risk. If you would invest 1,004 in American Acquisition Opportunity on August 28, 2024 and sell it today you would earn a total of 78.00 from holding American Acquisition Opportunity or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 34.51% |
| Values | Daily Returns |
American Acquisition Opportuni vs. Golden Star Acquisition
Performance |
| Timeline |
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Golden Star Acquisition |
American Acquisition and Golden Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Acquisition and Golden Star
The main advantage of trading using opposite American Acquisition and Golden Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Acquisition position performs unexpectedly, Golden Star 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 Star will offset losses from the drop in Golden Star's long position.The idea behind American Acquisition Opportunity and Golden Star Acquisition 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.| Golden Star vs. Aurora Innovation | Golden Star vs. HUMANA INC | Golden Star vs. Aquagold International | Golden Star vs. Barloworld Ltd ADR |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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