Correlation Between Acme United and Golden Heaven

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

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

Diversification Opportunities for Acme United and Golden Heaven

-0.07

Correlation Coefficient

Acme United  Golden Heaven

Good diversification

The 3 months correlation between Acme and Golden is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Acme United and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group and Acme United 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 Acme United are associated (or correlated) with Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Acme United i.e., Acme United and Golden Heaven go up and down completely randomly.

Pair Corralation between Acme United and Golden Heaven

Considering the 90-day investment horizon Acme United is expected to generate 0.28 times more return on investment than Golden Heaven. However, Acme United is 3.59 times less risky than Golden Heaven. It trades about 0.01 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.2 per unit of risk. If you would invest  4,354  in Acme United on September 15, 2024 and sell it today you would lose (25.00) from holding Acme United or give up 0.57% of portfolio value over 90 days.

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

Acme United  vs.  Golden Heaven Group

Acme United

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acme United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Acme United is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Golden Heaven Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Heaven Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Acme United and Golden Heaven

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

The idea behind Acme United and Golden Heaven Group 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 Global Correlations module to find global opportunities by holding instruments from different markets.