Correlation Between Goldenstone Acquisition and Compass Diversified

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Can any of the company-specific risk be diversified away by investing in both Goldenstone Acquisition and Compass Diversified 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 Goldenstone Acquisition and Compass Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goldenstone Acquisition Limited and Compass Diversified Holdings, you can compare the effects of market volatilities on Goldenstone Acquisition and Compass Diversified 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 Goldenstone Acquisition with a short position of Compass Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldenstone Acquisition and Compass Diversified.

Diversification Opportunities for Goldenstone Acquisition and Compass Diversified

GoldenstoneCompassDiversified AwayGoldenstoneCompassDiversified Away100%
-0.57
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Goldenstone and Compass is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Goldenstone Acquisition Limite and Compass Diversified Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Diversified and Goldenstone Acquisition 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 Goldenstone Acquisition Limited are associated (or correlated) with Compass Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Diversified has no effect on the direction of Goldenstone Acquisition i.e., Goldenstone Acquisition and Compass Diversified go up and down completely randomly.

Pair Corralation between Goldenstone Acquisition and Compass Diversified

Assuming the 90 days horizon Goldenstone Acquisition Limited is expected to generate 24.09 times more return on investment than Compass Diversified. However, Goldenstone Acquisition is 24.09 times more volatile than Compass Diversified Holdings. It trades about 0.38 of its potential returns per unit of risk. Compass Diversified Holdings is currently generating about -0.13 per unit of risk. If you would invest  2.49  in Goldenstone Acquisition Limited on November 27, 2024 and sell it today you would earn a total of  6.33  from holding Goldenstone Acquisition Limited or generate 254.22% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy85.0%
ValuesDaily Returns

Goldenstone Acquisition Limite  vs.  Compass Diversified Holdings

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50050100150200
JavaScript chart by amCharts 3.21.15GDSTW CODI
       Timeline  
Goldenstone Acquisition 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Goldenstone Acquisition Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15AugSepOctNovDecJanFebSepOctNovDecJanFeb
Compass Diversified 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Compass Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb20.52121.52222.52323.524

Goldenstone Acquisition and Compass Diversified Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-82.51-61.8-41.08-20.37-0.1322.0344.8267.6190.4113.2 0.050.100.150.20
JavaScript chart by amCharts 3.21.15GDSTW CODI
       Returns  

Pair Trading with Goldenstone Acquisition and Compass Diversified

The main advantage of trading using opposite Goldenstone Acquisition and Compass Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldenstone Acquisition position performs unexpectedly, Compass Diversified 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 Compass Diversified will offset losses from the drop in Compass Diversified's long position.
The idea behind Goldenstone Acquisition Limited and Compass Diversified Holdings 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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