Correlation Between GOLDEN GUINEA and TRANSCORP HOTELS
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By analyzing existing cross correlation between GOLDEN GUINEA BREWERIES and TRANSCORP HOTELS PLC, you can compare the effects of market volatilities on GOLDEN GUINEA and TRANSCORP HOTELS 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 TRANSCORP HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDEN GUINEA and TRANSCORP HOTELS.
Diversification Opportunities for GOLDEN GUINEA and TRANSCORP HOTELS
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GOLDEN and TRANSCORP is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GOLDEN GUINEA BREWERIES and TRANSCORP HOTELS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRANSCORP HOTELS 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 TRANSCORP HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRANSCORP HOTELS PLC has no effect on the direction of GOLDEN GUINEA i.e., GOLDEN GUINEA and TRANSCORP HOTELS go up and down completely randomly.
Pair Corralation between GOLDEN GUINEA and TRANSCORP HOTELS
Assuming the 90 days trading horizon GOLDEN GUINEA is expected to generate 5.64 times less return on investment than TRANSCORP HOTELS. But when comparing it to its historical volatility, GOLDEN GUINEA BREWERIES is 3.16 times less risky than TRANSCORP HOTELS. It trades about 0.08 of its potential returns per unit of risk. TRANSCORP HOTELS PLC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,440 in TRANSCORP HOTELS PLC on September 2, 2024 and sell it today you would earn a total of 6,160 from holding TRANSCORP HOTELS PLC or generate 138.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GOLDEN GUINEA BREWERIES vs. TRANSCORP HOTELS PLC
Performance |
| Timeline |
| GOLDEN GUINEA BREWERIES |
| TRANSCORP HOTELS PLC |
GOLDEN GUINEA and TRANSCORP HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GOLDEN GUINEA and TRANSCORP HOTELS
The main advantage of trading using opposite GOLDEN GUINEA and TRANSCORP HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GOLDEN GUINEA position performs unexpectedly, TRANSCORP HOTELS 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 TRANSCORP HOTELS will offset losses from the drop in TRANSCORP HOTELS's long position.The idea behind GOLDEN GUINEA BREWERIES and TRANSCORP HOTELS 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.| TRANSCORP HOTELS vs. GUINEA INSURANCE PLC | TRANSCORP HOTELS vs. AXAMANSARD INSURANCE PLC | TRANSCORP HOTELS vs. C I LEASING | TRANSCORP HOTELS vs. AFRICAN ALLIANCE INSURANCE |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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