Correlation Between Lucky Cement and Goldsun Building

Can any of the company-specific risk be diversified away by investing in both Lucky Cement and Goldsun Building 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 Lucky Cement and Goldsun Building into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lucky Cement Co and Goldsun Building Materials, you can compare the effects of market volatilities on Lucky Cement and Goldsun Building 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 Lucky Cement with a short position of Goldsun Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lucky Cement and Goldsun Building.

Diversification Opportunities for Lucky Cement and Goldsun Building

-0.22

Correlation Coefficient

Lucky Cement  Goldsun Building

Very good diversification

The 3 months correlation between Lucky and Goldsun is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lucky Cement Co and Goldsun Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldsun Building Mat and Lucky Cement 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 Lucky Cement Co are associated (or correlated) with Goldsun Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldsun Building Mat has no effect on the direction of Lucky Cement i.e., Lucky Cement and Goldsun Building go up and down completely randomly.

Pair Corralation between Lucky Cement and Goldsun Building

Assuming the 90 days trading horizon Lucky Cement is expected to generate 2.31 times less return on investment than Goldsun Building. But when comparing it to its historical volatility, Lucky Cement Co is 1.17 times less risky than Goldsun Building. It trades about 0.04 of its potential returns per unit of risk. Goldsun Building Materials is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,585  in Goldsun Building Materials on September 28, 2024 and sell it today you would earn a total of  2,135  from holding Goldsun Building Materials or generate 82.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lucky Cement Co  vs.  Goldsun Building Materials

Lucky Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lucky Cement Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lucky Cement is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Goldsun Building Mat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldsun Building Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Lucky Cement and Goldsun Building

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

The idea behind Lucky Cement Co and Goldsun Building Materials 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.