Correlation Between American Leisure and Gold Ent

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Can any of the company-specific risk be diversified away by investing in both American Leisure and Gold Ent 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 Leisure and Gold Ent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Leisure Holdings and Gold Ent Group, you can compare the effects of market volatilities on American Leisure and Gold Ent 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 Leisure with a short position of Gold Ent. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Leisure and Gold Ent.

Diversification Opportunities for American Leisure and Gold Ent

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between American and Gold is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Leisure Holdings and Gold Ent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Ent Group and American Leisure 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 Leisure Holdings are associated (or correlated) with Gold Ent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Ent Group has no effect on the direction of American Leisure i.e., American Leisure and Gold Ent go up and down completely randomly.

Pair Corralation between American Leisure and Gold Ent

Given the investment horizon of 90 days American Leisure Holdings is expected to generate 1.18 times more return on investment than Gold Ent. However, American Leisure is 1.18 times more volatile than Gold Ent Group. It trades about 0.14 of its potential returns per unit of risk. Gold Ent Group is currently generating about 0.12 per unit of risk. If you would invest  0.04  in American Leisure Holdings on August 29, 2024 and sell it today you would lose (0.03) from holding American Leisure Holdings or give up 75.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

American Leisure Holdings  vs.  Gold Ent Group

 Performance 
       Timeline  
American Leisure Holdings 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Gold Ent Group 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Gold Ent Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Gold Ent reported solid returns over the last few months and may actually be approaching a breakup point.

American Leisure and Gold Ent Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Leisure and Gold Ent

The main advantage of trading using opposite American Leisure and Gold Ent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Leisure position performs unexpectedly, Gold Ent 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 Ent will offset losses from the drop in Gold Ent's long position.
The idea behind American Leisure Holdings and Gold Ent Group 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.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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