Correlation Between Golden Star and Rio2
Can any of the company-specific risk be diversified away by investing in both Golden Star and Rio2 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 Star and Rio2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Star Resource and Rio2 Limited, you can compare the effects of market volatilities on Golden Star and Rio2 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 Star with a short position of Rio2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Star and Rio2.
Diversification Opportunities for Golden Star and Rio2
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Golden and Rio2 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Resource and Rio2 Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio2 Limited and Golden Star 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 Star Resource are associated (or correlated) with Rio2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio2 Limited has no effect on the direction of Golden Star i.e., Golden Star and Rio2 go up and down completely randomly.
Pair Corralation between Golden Star and Rio2
If you would invest 115.00 in Golden Star Resource on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Golden Star Resource or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Star Resource vs. Rio2 Limited
Performance |
| Timeline |
| Golden Star Resource |
| Rio2 Limited |
Golden Star and Rio2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Star and Rio2
The main advantage of trading using opposite Golden Star and Rio2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Star position performs unexpectedly, Rio2 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 Rio2 will offset losses from the drop in Rio2's long position.| Golden Star vs. China Aircraft Leasing | Golden Star vs. NetSol Technologies | Golden Star vs. Zhihu Inc ADR | Golden Star vs. Q2 Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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