Correlation Between International Games and Golden Biotechnology

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

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

Diversification Opportunities for International Games and Golden Biotechnology

0.1

Correlation Coefficient

International Games  Golden Biotechnology

Average diversification

The 3 months correlation between International and Golden is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding International Games System and Golden Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Biotechnology and International Games 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 International Games System are associated (or correlated) with Golden Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Biotechnology has no effect on the direction of International Games i.e., International Games and Golden Biotechnology go up and down completely randomly.

Pair Corralation between International Games and Golden Biotechnology

Assuming the 90 days trading horizon International Games System is expected to generate 21.01 times more return on investment than Golden Biotechnology. However, International Games is 21.01 times more volatile than Golden Biotechnology. It trades about 0.06 of its potential returns per unit of risk. Golden Biotechnology is currently generating about -0.08 per unit of risk. If you would invest  20,977  in International Games System on October 4, 2024 and sell it today you would earn a total of  75,323  from holding International Games System or generate 359.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

International Games System  vs.  Golden Biotechnology

International Games

Risk-Adjusted Performance

0 of 100

Weak

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

Golden Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal 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.

Pair Trading with International Games and Golden Biotechnology

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

The idea behind International Games System and Golden Biotechnology 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.