Correlation Between H FARM and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both H FARM and Goldman Sachs 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 H FARM and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H FARM SPA and The Goldman Sachs, you can compare the effects of market volatilities on H FARM and Goldman Sachs 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 H FARM with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and Goldman Sachs.

Diversification Opportunities for H FARM and Goldman Sachs

0.3

Correlation Coefficient

H FARM  Goldman Sachs

Weak diversification

The 3 months correlation between 5JQ and Goldman is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and H FARM 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 H FARM SPA are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of H FARM i.e., H FARM and Goldman Sachs go up and down completely randomly.

Pair Corralation between H FARM and Goldman Sachs

Assuming the 90 days horizon H FARM SPA is expected to generate 4.94 times more return on investment than Goldman Sachs. However, H FARM is 4.94 times more volatile than The Goldman Sachs. It trades about 0.07 of its potential returns per unit of risk. The Goldman Sachs is currently generating about 0.04 per unit of risk. If you would invest  11.00  in H FARM SPA on December 1, 2024 and sell it today you would earn a total of  2.00  from holding H FARM SPA or generate 18.18% return on investment over 90 days.

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

H FARM SPA  vs.  The Goldman Sachs

H FARM SPA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in H FARM SPA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, H FARM reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Goldman Sachs is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with H FARM and Goldman Sachs

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

The idea behind H FARM SPA and The Goldman Sachs 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.