Correlation Between Golden Metal and Light Science
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Light Science 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 Metal and Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Metal Resources and Light Science Technologies, you can compare the effects of market volatilities on Golden Metal and Light Science 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 Metal with a short position of Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Light Science.
Diversification Opportunities for Golden Metal and Light Science
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Golden and Light is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno and Golden Metal 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 Metal Resources are associated (or correlated) with Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Golden Metal i.e., Golden Metal and Light Science go up and down completely randomly.
Pair Corralation between Golden Metal and Light Science
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 1.01 times more return on investment than Light Science. However, Golden Metal is 1.01 times more volatile than Light Science Technologies. It trades about 0.03 of its potential returns per unit of risk. Light Science Technologies is currently generating about -0.01 per unit of risk. If you would invest 3,150 in Golden Metal Resources on November 7, 2024 and sell it today you would earn a total of 110.00 from holding Golden Metal Resources or generate 3.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Metal Resources vs. Light Science Technologies
Performance |
| Timeline |
| Golden Metal Resources |
| Light Science Techno |
Golden Metal and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Light Science
The main advantage of trading using opposite Golden Metal and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| Golden Metal vs. Auto Trader Group | Golden Metal vs. Qurate Retail Series | Golden Metal vs. Eastman Chemical Co | Golden Metal vs. Air Products Chemicals |
| Light Science vs. SM Energy Co | Light Science vs. FuelCell Energy | Light Science vs. Grand Vision Media | Light Science vs. Overstock |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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