Correlation Between Golden Biotechnology and K Way

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

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

Diversification Opportunities for Golden Biotechnology and K Way

-0.28

Correlation Coefficient

Golden Biotechnology  K Way

Very good diversification

The 3 months correlation between Golden and 5201 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and K Way Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Way Information and Golden Biotechnology 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 Biotechnology are associated (or correlated) with K Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Way Information has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and K Way go up and down completely randomly.

Pair Corralation between Golden Biotechnology and K Way

Assuming the 90 days trading horizon Golden Biotechnology is expected to generate 2.25 times more return on investment than K Way. However, Golden Biotechnology is 2.25 times more volatile than K Way Information. It trades about 0.05 of its potential returns per unit of risk. K Way Information is currently generating about 0.05 per unit of risk. If you would invest  1,625  in Golden Biotechnology on October 23, 2024 and sell it today you would earn a total of  110.00  from holding Golden Biotechnology or generate 6.77% return on investment over 90 days.

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

Golden Biotechnology  vs.  K Way Information

Golden Biotechnology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Biotechnology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Golden Biotechnology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

K Way Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in K Way Information are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, K Way 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 Golden Biotechnology and K Way

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

The idea behind Golden Biotechnology and K Way Information 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.