Correlation Between Golden Star and American Acquisition
Can any of the company-specific risk be diversified away by investing in both Golden Star and American Acquisition 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 American Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Star Acquisition and American Acquisition Opportunity, you can compare the effects of market volatilities on Golden Star and American Acquisition 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 American Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Star and American Acquisition.
Diversification Opportunities for Golden Star and American Acquisition
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Golden and American is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Acquisition and American Acquisition Opportuni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Acquisition 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 Acquisition are associated (or correlated) with American Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Acquisition has no effect on the direction of Golden Star i.e., Golden Star and American Acquisition go up and down completely randomly.
Pair Corralation between Golden Star and American Acquisition
Assuming the 90 days horizon Golden Star is expected to generate 1.33 times less return on investment than American Acquisition. In addition to that, Golden Star is 2.53 times more volatile than American Acquisition Opportunity. It trades about 0.03 of its total potential returns per unit of risk. American Acquisition Opportunity is currently generating about 0.09 per unit of volatility. If you would invest 1,004 in American Acquisition Opportunity on August 28, 2024 and sell it today you would earn a total of 78.00 from holding American Acquisition Opportunity or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 34.51% |
| Values | Daily Returns |
Golden Star Acquisition vs. American Acquisition Opportuni
Performance |
| Timeline |
| Golden Star Acquisition |
| American Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Golden Star and American Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Star and American Acquisition
The main advantage of trading using opposite Golden Star and American Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Star position performs unexpectedly, American Acquisition 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 American Acquisition will offset losses from the drop in American Acquisition's long position.| Golden Star vs. Aurora Innovation | Golden Star vs. HUMANA INC | Golden Star vs. Aquagold International | Golden Star vs. Barloworld Ltd ADR |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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