Correlation Between Victory New and Goldsun Building

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

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

Diversification Opportunities for Victory New and Goldsun Building

-0.2

Correlation Coefficient

Victory New  Goldsun Building

Good diversification

The 3 months correlation between Victory and Goldsun is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials 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 Victory New 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 Victory New Materials 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 Victory New i.e., Victory New and Goldsun Building go up and down completely randomly.

Pair Corralation between Victory New and Goldsun Building

Assuming the 90 days trading horizon Victory New Materials is expected to generate 0.27 times more return on investment than Goldsun Building. However, Victory New Materials is 3.73 times less risky than Goldsun Building. It trades about -0.43 of its potential returns per unit of risk. Goldsun Building Materials is currently generating about -0.23 per unit of risk. If you would invest  999.00  in Victory New Materials on September 22, 2024 and sell it today you would lose (41.00) from holding Victory New Materials or give up 4.1% of portfolio value over 90 days.

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

Victory New Materials  vs.  Goldsun Building Materials

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Victory New and Goldsun Building

The main advantage of trading using opposite Victory New and Goldsun Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory New 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 Victory New Materials 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.