Correlation Between GOLDEN GUINEA and FIDSON HEALTHCARE

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Can any of the company-specific risk be diversified away by investing in both GOLDEN GUINEA and FIDSON HEALTHCARE 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 GUINEA and FIDSON HEALTHCARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GOLDEN GUINEA BREWERIES and FIDSON HEALTHCARE PLC, you can compare the effects of market volatilities on GOLDEN GUINEA and FIDSON HEALTHCARE 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 GUINEA with a short position of FIDSON HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDEN GUINEA and FIDSON HEALTHCARE.

Diversification Opportunities for GOLDEN GUINEA and FIDSON HEALTHCARE

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between GOLDEN and FIDSON is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding GOLDEN GUINEA BREWERIES and FIDSON HEALTHCARE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDSON HEALTHCARE PLC and GOLDEN GUINEA 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 GUINEA BREWERIES are associated (or correlated) with FIDSON HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDSON HEALTHCARE PLC has no effect on the direction of GOLDEN GUINEA i.e., GOLDEN GUINEA and FIDSON HEALTHCARE go up and down completely randomly.

Pair Corralation between GOLDEN GUINEA and FIDSON HEALTHCARE

Assuming the 90 days trading horizon GOLDEN GUINEA BREWERIES is expected to under-perform the FIDSON HEALTHCARE. But the stock apears to be less risky and, when comparing its historical volatility, GOLDEN GUINEA BREWERIES is 7.92 times less risky than FIDSON HEALTHCARE. The stock trades about -0.21 of its potential returns per unit of risk. The FIDSON HEALTHCARE PLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,540  in FIDSON HEALTHCARE PLC on August 31, 2024 and sell it today you would earn a total of  0.00  from holding FIDSON HEALTHCARE PLC or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GOLDEN GUINEA BREWERIES  vs.  FIDSON HEALTHCARE PLC

 Performance 
       Timeline  
GOLDEN GUINEA BREWERIES 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in GOLDEN GUINEA BREWERIES are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, GOLDEN GUINEA exhibited solid returns over the last few months and may actually be approaching a breakup point.
FIDSON HEALTHCARE PLC 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in FIDSON HEALTHCARE PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, FIDSON HEALTHCARE sustained solid returns over the last few months and may actually be approaching a breakup point.

GOLDEN GUINEA and FIDSON HEALTHCARE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GOLDEN GUINEA and FIDSON HEALTHCARE

The main advantage of trading using opposite GOLDEN GUINEA and FIDSON HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDEN GUINEA position performs unexpectedly, FIDSON HEALTHCARE 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 FIDSON HEALTHCARE will offset losses from the drop in FIDSON HEALTHCARE's long position.
The idea behind GOLDEN GUINEA BREWERIES and FIDSON HEALTHCARE PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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