Correlation Between Gold Rain and Foxconn Technology

Can any of the company-specific risk be diversified away by investing in both Gold Rain and Foxconn Technology 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 Gold Rain and Foxconn Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Rain Enterprises and Foxconn Technology Co, you can compare the effects of market volatilities on Gold Rain and Foxconn Technology 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 Gold Rain with a short position of Foxconn Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Rain and Foxconn Technology.

Diversification Opportunities for Gold Rain and Foxconn Technology

-0.05

Correlation Coefficient

Gold Rain  Foxconn Technology

Good diversification

The 3 months correlation between Gold and Foxconn is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Gold Rain Enterprises and Foxconn Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foxconn Technology and Gold Rain 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 Gold Rain Enterprises are associated (or correlated) with Foxconn Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foxconn Technology has no effect on the direction of Gold Rain i.e., Gold Rain and Foxconn Technology go up and down completely randomly.

Pair Corralation between Gold Rain and Foxconn Technology

Assuming the 90 days trading horizon Gold Rain Enterprises is expected to generate 1.36 times more return on investment than Foxconn Technology. However, Gold Rain is 1.36 times more volatile than Foxconn Technology Co. It trades about 0.04 of its potential returns per unit of risk. Foxconn Technology Co is currently generating about 0.04 per unit of risk. If you would invest  3,695  in Gold Rain Enterprises on October 14, 2024 and sell it today you would earn a total of  1,825  from holding Gold Rain Enterprises or generate 49.39% return on investment over 90 days.

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

Gold Rain Enterprises  vs.  Foxconn Technology Co

Gold Rain Enterprises

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Rain Enterprises are ranked lower than 5 (%) 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.

Foxconn Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Foxconn Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Foxconn Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Rain and Foxconn Technology

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

The idea behind Gold Rain Enterprises and Foxconn Technology Co 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.