Correlation Between GMO Internet and Golden Energy
Can any of the company-specific risk be diversified away by investing in both GMO Internet and Golden Energy 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 GMO Internet and Golden Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GMO Internet and Golden Energy Offshore, you can compare the effects of market volatilities on GMO Internet and Golden Energy 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 GMO Internet with a short position of Golden Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMO Internet and Golden Energy.
Diversification Opportunities for GMO Internet and Golden Energy
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GMO and Golden is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding GMO Internet and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore and GMO Internet 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 GMO Internet are associated (or correlated) with Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of GMO Internet i.e., GMO Internet and Golden Energy go up and down completely randomly.
Pair Corralation between GMO Internet and Golden Energy
Assuming the 90 days horizon GMO Internet is expected to generate 0.32 times more return on investment than Golden Energy. However, GMO Internet is 3.12 times less risky than Golden Energy. It trades about 0.22 of its potential returns per unit of risk. Golden Energy Offshore is currently generating about -0.22 per unit of risk. If you would invest 1,680 in GMO Internet on November 2, 2024 and sell it today you would earn a total of 15.00 from holding GMO Internet or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
GMO Internet vs. Golden Energy Offshore
Performance |
| Timeline |
| GMO Internet |
| Golden Energy Offshore |
GMO Internet and Golden Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GMO Internet and Golden Energy
The main advantage of trading using opposite GMO Internet and Golden Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMO Internet position performs unexpectedly, Golden Energy 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 Golden Energy will offset losses from the drop in Golden Energy's long position.| GMO Internet vs. Cable One | GMO Internet vs. Charter Communications | GMO Internet vs. Frontier Communications Parent | GMO Internet vs. Liberty Broadband Srs |
| Golden Energy vs. Gerdau SA ADR | Golden Energy vs. Allient | Golden Energy vs. Tianjin Capital Environmental | Golden Energy vs. SunCoke Energy |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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