Correlation Between Golden Star and Mountain I
Can any of the company-specific risk be diversified away by investing in both Golden Star and Mountain I 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 Mountain I 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 Mountain I Acquisition, you can compare the effects of market volatilities on Golden Star and Mountain I 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 Mountain I. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Star and Mountain I.
Diversification Opportunities for Golden Star and Mountain I
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Golden and Mountain is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Acquisition and Mountain I Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mountain I 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 Mountain I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mountain I Acquisition has no effect on the direction of Golden Star i.e., Golden Star and Mountain I go up and down completely randomly.
Pair Corralation between Golden Star and Mountain I
Assuming the 90 days horizon Golden Star Acquisition is expected to generate 8.85 times more return on investment than Mountain I. However, Golden Star is 8.85 times more volatile than Mountain I Acquisition. It trades about 0.03 of its potential returns per unit of risk. Mountain I Acquisition is currently generating about 0.03 per unit of risk. If you would invest 1,065 in Golden Star Acquisition on September 12, 2024 and sell it today you would earn a total of 84.00 from holding Golden Star Acquisition or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.94% |
| Values | Daily Returns |
Golden Star Acquisition vs. Mountain I Acquisition
Performance |
| Timeline |
| Golden Star Acquisition |
| Mountain I Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Golden Star and Mountain I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Star and Mountain I
The main advantage of trading using opposite Golden Star and Mountain I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Star position performs unexpectedly, Mountain I 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 Mountain I will offset losses from the drop in Mountain I's long position.| Golden Star vs. Afya | Golden Star vs. Cebu Air ADR | Golden Star vs. Ryanair Holdings PLC | Golden Star vs. Westinghouse Air Brake |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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