Correlation Between GOLD ROAD and Pick N
Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and Pick N 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 GOLD ROAD and Pick N into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLD ROAD RES and Pick n Pay, you can compare the effects of market volatilities on GOLD ROAD and Pick N 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 GOLD ROAD with a short position of Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Pick N.
Diversification Opportunities for GOLD ROAD and Pick N
Poor diversification
The 3 months correlation between GOLD and Pick is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Pick n Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick n Pay and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick n Pay has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Pick N go up and down completely randomly.
Pair Corralation between GOLD ROAD and Pick N
Assuming the 90 days trading horizon GOLD ROAD is expected to generate 1.73 times less return on investment than Pick N. In addition to that, GOLD ROAD is 1.1 times more volatile than Pick n Pay. It trades about 0.13 of its total potential returns per unit of risk. Pick n Pay is currently generating about 0.24 per unit of volatility. If you would invest 136.00 in Pick n Pay on September 4, 2024 and sell it today you would earn a total of 19.00 from holding Pick n Pay or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
GOLD ROAD RES vs. Pick n Pay
Performance |
| Timeline |
| GOLD ROAD RES |
| Pick n Pay |
GOLD ROAD and Pick N Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLD ROAD and Pick N
The main advantage of trading using opposite GOLD ROAD and Pick N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLD ROAD position performs unexpectedly, Pick N 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 Pick N will offset losses from the drop in Pick N's long position.The idea behind GOLD ROAD RES and Pick n Pay 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.| Pick N vs. GOLD ROAD RES | Pick N vs. PARKEN Sport Entertainment | Pick N vs. TRAINLINE PLC LS | Pick N vs. Fukuyama Transporting Co |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |