Correlation Between Victory New and Gold Rain

Can any of the company-specific risk be diversified away by investing in both Victory New and Gold Rain 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 Gold Rain 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 Gold Rain Enterprises, you can compare the effects of market volatilities on Victory New and Gold Rain 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 Gold Rain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Victory New and Gold Rain.

Diversification Opportunities for Victory New and Gold Rain

-0.3

Correlation Coefficient

Victory New  Gold Rain

Very good diversification

The 3 months correlation between Victory and Gold is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Victory New Materials and Gold Rain Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Rain Enterprises 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 Gold Rain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Rain Enterprises has no effect on the direction of Victory New i.e., Victory New and Gold Rain go up and down completely randomly.

Pair Corralation between Victory New and Gold Rain

Assuming the 90 days trading horizon Victory New Materials is expected to under-perform the Gold Rain. But the stock apears to be less risky and, when comparing its historical volatility, Victory New Materials is 2.11 times less risky than Gold Rain. The stock trades about -0.02 of its potential returns per unit of risk. The Gold Rain Enterprises is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,695  in Gold Rain Enterprises on October 15, 2024 and sell it today you would earn a total of  1,865  from holding Gold Rain Enterprises or generate 50.47% return on investment over 90 days.

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

Victory New Materials  vs.  Gold Rain Enterprises

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 weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Gold Rain Enterprises

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Rain Enterprises are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Gold Rain may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Victory New and Gold Rain

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

The idea behind Victory New Materials and Gold Rain Enterprises 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.