Correlation Between American Express and Golden Agri
Can any of the company-specific risk be diversified away by investing in both American Express and Golden Agri 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 Express and Golden Agri into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Golden Agri Resources, you can compare the effects of market volatilities on American Express and Golden Agri 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 Express with a short position of Golden Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Golden Agri.
Diversification Opportunities for American Express and Golden Agri
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Golden is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources and American Express 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 Express are associated (or correlated) with Golden Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of American Express i.e., American Express and Golden Agri go up and down completely randomly.
Pair Corralation between American Express and Golden Agri
Considering the 90-day investment horizon American Express is expected to generate 1.27 times less return on investment than Golden Agri. But when comparing it to its historical volatility, American Express is 3.92 times less risky than Golden Agri. It trades about 0.1 of its potential returns per unit of risk. Golden Agri Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Golden Agri Resources on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Golden Agri Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.05% |
| Values | Daily Returns |
American Express vs. Golden Agri Resources
Performance |
| Timeline |
| American Express |
| Golden Agri Resources |
American Express and Golden Agri Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Express and Golden Agri
The main advantage of trading using opposite American Express and Golden Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Golden Agri 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 Agri will offset losses from the drop in Golden Agri's long position.| American Express vs. Highway Holdings Limited | American Express vs. QCR Holdings | American Express vs. Partner Communications | American Express vs. Acumen Pharmaceuticals |
| Golden Agri vs. Wilmar International | Golden Agri vs. SLC Agricola SA | Golden Agri vs. Brasilagro Adr | Golden Agri vs. Alico Inc |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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