Correlation Between Pick N and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both Pick N and GOLD ROAD 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 Pick N and GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pick n Pay and GOLD ROAD RES, you can compare the effects of market volatilities on Pick N and GOLD ROAD 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 Pick N with a short position of GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pick N and GOLD ROAD.
Diversification Opportunities for Pick N and GOLD ROAD
Poor diversification
The 3 months correlation between Pick and GOLD is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Pick n Pay and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES and Pick N 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 Pick n Pay are associated (or correlated) with GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Pick N i.e., Pick N and GOLD ROAD go up and down completely randomly.
Pair Corralation between Pick N and GOLD ROAD
Assuming the 90 days horizon Pick n Pay is expected to generate 0.91 times more return on investment than GOLD ROAD. However, Pick n Pay is 1.1 times less risky than GOLD ROAD. It trades about 0.24 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.13 per unit of risk. If you would invest 136.00 in Pick n Pay on September 4, 2024 and sell it today you would earn a total of 19.00 from holding Pick n Pay or generate 13.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pick n Pay vs. GOLD ROAD RES
Performance |
| Timeline |
| Pick n Pay |
| GOLD ROAD RES |
Pick N and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pick N and GOLD ROAD
The main advantage of trading using opposite Pick N and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pick N position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| Pick N vs. GOLD ROAD RES | Pick N vs. PARKEN Sport Entertainment | Pick N vs. TRAINLINE PLC LS | Pick N vs. Fukuyama Transporting Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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