Correlation Between Golden Bridge and Genie Music

Can any of the company-specific risk be diversified away by investing in both Golden Bridge and Genie Music 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 Bridge and Genie Music into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Bridge Investment and Genie Music, you can compare the effects of market volatilities on Golden Bridge and Genie Music 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 Bridge with a short position of Genie Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Bridge and Genie Music.

Diversification Opportunities for Golden Bridge and Genie Music

0.21

Correlation Coefficient

Golden Bridge  Genie Music

Modest diversification

The 3 months correlation between Golden and Genie is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Golden Bridge Investment and Genie Music in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genie Music and Golden Bridge 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 Bridge Investment are associated (or correlated) with Genie Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genie Music has no effect on the direction of Golden Bridge i.e., Golden Bridge and Genie Music go up and down completely randomly.

Pair Corralation between Golden Bridge and Genie Music

Assuming the 90 days trading horizon Golden Bridge Investment is expected to generate 0.52 times more return on investment than Genie Music. However, Golden Bridge Investment is 1.92 times less risky than Genie Music. It trades about -0.05 of its potential returns per unit of risk. Genie Music is currently generating about -0.06 per unit of risk. If you would invest  43,300  in Golden Bridge Investment on December 25, 2024 and sell it today you would lose (1,300) from holding Golden Bridge Investment or give up 3.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Golden Bridge Investment  vs.  Genie Music

Golden Bridge Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Bridge Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Golden Bridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Genie Music

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genie Music has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Golden Bridge and Genie Music

The main advantage of trading using opposite Golden Bridge and Genie Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Bridge position performs unexpectedly, Genie Music 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 Genie Music will offset losses from the drop in Genie Music's long position.

The idea behind Golden Bridge Investment and Genie Music 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.