Correlation Between Golden Heaven and NL Industries
Can any of the company-specific risk be diversified away by investing in both Golden Heaven and NL Industries 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 Heaven and NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Heaven Group and NL Industries, you can compare the effects of market volatilities on Golden Heaven and NL Industries 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 Heaven with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Heaven and NL Industries.
Diversification Opportunities for Golden Heaven and NL Industries
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Golden and NL Industries is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Golden Heaven Group and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and Golden Heaven 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 Heaven Group are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Golden Heaven i.e., Golden Heaven and NL Industries go up and down completely randomly.
Pair Corralation between Golden Heaven and NL Industries
Given the investment horizon of 90 days Golden Heaven Group is expected to under-perform the NL Industries. In addition to that, Golden Heaven is 2.22 times more volatile than NL Industries. It trades about -0.07 of its total potential returns per unit of risk. NL Industries is currently generating about 0.12 per unit of volatility. If you would invest 754.00 in NL Industries on September 4, 2024 and sell it today you would earn a total of 57.00 from holding NL Industries or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Heaven Group vs. NL Industries
Performance |
| Timeline |
| Golden Heaven Group |
| NL Industries |
Golden Heaven and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Heaven and NL Industries
The main advantage of trading using opposite Golden Heaven and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Heaven position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| Golden Heaven vs. Hyatt Hotels | Golden Heaven vs. Smart Share Global | Golden Heaven vs. Sweetgreen | Golden Heaven vs. Wyndham Hotels Resorts |
| NL Industries vs. Atos SE | NL Industries vs. Deveron Corp | NL Industries vs. Appen Limited | NL Industries vs. Atos Origin SA |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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