Correlation Between Golden Metal and Pressure Technologies
Can any of the company-specific risk be diversified away by investing in both Golden Metal and Pressure Technologies 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 Pressure Technologies 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 Pressure Technologies Plc, you can compare the effects of market volatilities on Golden Metal and Pressure Technologies 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 Pressure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Metal and Pressure Technologies.
Diversification Opportunities for Golden Metal and Pressure Technologies
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Golden and Pressure is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Golden Metal Resources and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc 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 Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of Golden Metal i.e., Golden Metal and Pressure Technologies go up and down completely randomly.
Pair Corralation between Golden Metal and Pressure Technologies
Assuming the 90 days trading horizon Golden Metal Resources is expected to generate 18.15 times more return on investment than Pressure Technologies. However, Golden Metal is 18.15 times more volatile than Pressure Technologies Plc. It trades about 0.06 of its potential returns per unit of risk. Pressure Technologies Plc is currently generating about 0.01 per unit of risk. If you would invest 9.00 in Golden Metal Resources on November 7, 2024 and sell it today you would earn a total of 3,251 from holding Golden Metal Resources or generate 36122.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.28% |
| Values | Daily Returns |
Golden Metal Resources vs. Pressure Technologies Plc
Performance |
| Timeline |
| Golden Metal Resources |
| Pressure Technologies Plc |
Golden Metal and Pressure Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Metal and Pressure Technologies
The main advantage of trading using opposite Golden Metal and Pressure Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Metal position performs unexpectedly, Pressure Technologies 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 Pressure Technologies will offset losses from the drop in Pressure Technologies' 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 |
| Pressure Technologies vs. Zoom Video Communications | Pressure Technologies vs. Endo International PLC | Pressure Technologies vs. Broadcom | Pressure Technologies vs. Victrex plc |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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