Correlation Between Barloworld and Golden Star
Can any of the company-specific risk be diversified away by investing in both Barloworld 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 Barloworld and Golden Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barloworld Ltd ADR and Golden Star Acquisition, you can compare the effects of market volatilities on Barloworld 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 Barloworld with a short position of Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Golden Star.
Diversification Opportunities for Barloworld and Golden Star
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barloworld and Golden is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR 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 Barloworld 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 Barloworld Ltd ADR 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 Barloworld i.e., Barloworld and Golden Star go up and down completely randomly.
Pair Corralation between Barloworld and Golden Star
Assuming the 90 days horizon Barloworld Ltd ADR is expected to generate 3.13 times more return on investment than Golden Star. However, Barloworld is 3.13 times more volatile than Golden Star Acquisition. It trades about 0.02 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 436.00 in Barloworld Ltd ADR on September 1, 2024 and sell it today you would lose (13.00) from holding Barloworld Ltd ADR or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.1% |
| Values | Daily Returns |
Barloworld Ltd ADR vs. Golden Star Acquisition
Performance |
| Timeline |
| Barloworld ADR |
| Golden Star Acquisition |
Barloworld and Golden Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barloworld and Golden Star
The main advantage of trading using opposite Barloworld and Golden Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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.| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
| Golden Star vs. Sweetgreen | Golden Star vs. National Beverage Corp | Golden Star vs. Bridgford Foods | Golden Star vs. SNDL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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