Correlation Between Golden Biotechnology and Galaxy Software

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

By analyzing existing cross correlation between Golden Biotechnology and Galaxy Software Services, you can compare the effects of market volatilities on Golden Biotechnology and Galaxy Software 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 Galaxy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Biotechnology and Galaxy Software.

Diversification Opportunities for Golden Biotechnology and Galaxy Software

-0.52

Correlation Coefficient

Golden Biotechnology  Galaxy Software

Excellent diversification

The 3 months correlation between Golden and Galaxy is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Golden Biotechnology and Galaxy Software Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Software Services 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 Galaxy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Software Services has no effect on the direction of Golden Biotechnology i.e., Golden Biotechnology and Galaxy Software go up and down completely randomly.

Pair Corralation between Golden Biotechnology and Galaxy Software

Assuming the 90 days trading horizon Golden Biotechnology is expected to under-perform the Galaxy Software. But the stock apears to be less risky and, when comparing its historical volatility, Golden Biotechnology is 1.3 times less risky than Galaxy Software. The stock trades about -0.02 of its potential returns per unit of risk. The Galaxy Software Services is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,950  in Galaxy Software Services on October 4, 2024 and sell it today you would earn a total of  600.00  from holding Galaxy Software Services or generate 5.02% return on investment over 90 days.

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

Golden Biotechnology  vs.  Galaxy Software Services

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.

Galaxy Software Services

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Golden Biotechnology and Galaxy Software

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

The idea behind Golden Biotechnology and Galaxy Software Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.