Correlation Between Globaltek Fabrication and Golden Friends

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

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

Diversification Opportunities for Globaltek Fabrication and Golden Friends

0.26

Correlation Coefficient

Globaltek Fabrication  Golden Friends

Modest diversification

The 3 months correlation between Globaltek and Golden is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Globaltek Fabrication Co and Golden Friends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Friends and Globaltek Fabrication 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 Globaltek Fabrication Co are associated (or correlated) with Golden Friends. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Friends has no effect on the direction of Globaltek Fabrication i.e., Globaltek Fabrication and Golden Friends go up and down completely randomly.

Pair Corralation between Globaltek Fabrication and Golden Friends

Assuming the 90 days trading horizon Globaltek Fabrication Co is expected to under-perform the Golden Friends. In addition to that, Globaltek Fabrication is 3.16 times more volatile than Golden Friends. It trades about -0.15 of its total potential returns per unit of risk. Golden Friends is currently generating about 0.04 per unit of volatility. If you would invest  10,150  in Golden Friends on October 25, 2024 and sell it today you would earn a total of  150.00  from holding Golden Friends or generate 1.48% return on investment over 90 days.

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

Globaltek Fabrication Co  vs.  Golden Friends

Globaltek Fabrication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globaltek Fabrication Co 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.

Golden Friends

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Friends are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Golden Friends is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Globaltek Fabrication and Golden Friends

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

The idea behind Globaltek Fabrication Co and Golden Friends 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.

Check out your portfolio center.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.