Correlation Between Golden Heaven and Smith Douglas
Can any of the company-specific risk be diversified away by investing in both Golden Heaven and Smith Douglas 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 Smith Douglas 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 Smith Douglas Homes, you can compare the effects of market volatilities on Golden Heaven and Smith Douglas 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 Smith Douglas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Heaven and Smith Douglas.
Diversification Opportunities for Golden Heaven and Smith Douglas
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and Smith is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Golden Heaven Group and Smith Douglas Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Douglas Homes 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 Smith Douglas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Douglas Homes has no effect on the direction of Golden Heaven i.e., Golden Heaven and Smith Douglas go up and down completely randomly.
Pair Corralation between Golden Heaven and Smith Douglas
Given the investment horizon of 90 days Golden Heaven Group is expected to generate 2.07 times more return on investment than Smith Douglas. However, Golden Heaven is 2.07 times more volatile than Smith Douglas Homes. It trades about 0.19 of its potential returns per unit of risk. Smith Douglas Homes is currently generating about -0.23 per unit of risk. If you would invest 198.00 in Golden Heaven Group on October 21, 2024 and sell it today you would earn a total of 32.00 from holding Golden Heaven Group or generate 16.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Heaven Group vs. Smith Douglas Homes
Performance |
| Timeline |
| Golden Heaven Group |
| Smith Douglas Homes |
Golden Heaven and Smith Douglas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Heaven and Smith Douglas
The main advantage of trading using opposite Golden Heaven and Smith Douglas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Heaven position performs unexpectedly, Smith Douglas 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 Smith Douglas will offset losses from the drop in Smith Douglas' long position.| Golden Heaven vs. Valneva SE ADR | Golden Heaven vs. Arrow Electronics | Golden Heaven vs. Oatly Group AB | Golden Heaven vs. Ambev SA ADR |
| Smith Douglas vs. British American Tobacco | Smith Douglas vs. KNOT Offshore Partners | Smith Douglas vs. Vulcan Materials | Smith Douglas vs. Scandinavian Tobacco Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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