Correlation Between Golden Arrow and FUTURETECH
Can any of the company-specific risk be diversified away by investing in both Golden Arrow and FUTURETECH 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 Golden Arrow and FUTURETECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Arrow Merger and FUTURETECH II ACQUISITION, you can compare the effects of market volatilities on Golden Arrow and FUTURETECH 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 Golden Arrow with a short position of FUTURETECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Arrow and FUTURETECH.
Diversification Opportunities for Golden Arrow and FUTURETECH
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Golden and FUTURETECH is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Golden Arrow Merger and FUTURETECH II ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUTURETECH II ACQUISITION and Golden Arrow 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 Golden Arrow Merger are associated (or correlated) with FUTURETECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUTURETECH II ACQUISITION has no effect on the direction of Golden Arrow i.e., Golden Arrow and FUTURETECH go up and down completely randomly.
Pair Corralation between Golden Arrow and FUTURETECH
Assuming the 90 days horizon Golden Arrow Merger is expected to generate 12.16 times more return on investment than FUTURETECH. However, Golden Arrow is 12.16 times more volatile than FUTURETECH II ACQUISITION. It trades about 0.28 of its potential returns per unit of risk. FUTURETECH II ACQUISITION is currently generating about -0.18 per unit of risk. If you would invest 17.00 in Golden Arrow Merger on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Golden Arrow Merger or generate 17.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.67% |
| Values | Daily Returns |
Golden Arrow Merger vs. FUTURETECH II ACQUISITION
Performance |
| Timeline |
| Golden Arrow Merger |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| FUTURETECH II ACQUISITION |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Golden Arrow and FUTURETECH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Arrow and FUTURETECH
The main advantage of trading using opposite Golden Arrow and FUTURETECH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Arrow position performs unexpectedly, FUTURETECH 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 FUTURETECH will offset losses from the drop in FUTURETECH's long position.The idea behind Golden Arrow Merger and FUTURETECH II 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.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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