Correlation Between Arsenal Digital and Golden Star

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

By analyzing existing cross correlation between Arsenal Digital Holdings and Golden Star Acquisition, you can compare the effects of market volatilities on Arsenal Digital and Golden Star 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 Arsenal Digital with a short position of Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arsenal Digital and Golden Star.

Diversification Opportunities for Arsenal Digital and Golden Star

0.41

Correlation Coefficient

Arsenal Digital  Golden Star

Very weak diversification

The 3 months correlation between Arsenal and Golden is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Arsenal Digital Holdings and Golden Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Acquisition and Arsenal Digital 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 Arsenal Digital Holdings are associated (or correlated) with Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Acquisition has no effect on the direction of Arsenal Digital i.e., Arsenal Digital and Golden Star go up and down completely randomly.

Pair Corralation between Arsenal Digital and Golden Star

Given the investment horizon of 90 days Arsenal Digital Holdings is expected to generate 14.32 times more return on investment than Golden Star. However, Arsenal Digital is 14.32 times more volatile than Golden Star Acquisition. It trades about 0.13 of its potential returns per unit of risk. Golden Star Acquisition is currently generating about 0.03 per unit of risk. If you would invest  4.00  in Arsenal Digital Holdings on September 13, 2024 and sell it today you would earn a total of  2.51  from holding Arsenal Digital Holdings or generate 62.75% return on investment over 90 days.

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

Arsenal Digital Holdings  vs.  Golden Star Acquisition

Arsenal Digital Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arsenal Digital Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Arsenal Digital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Golden Star Acquisition

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Arsenal Digital and Golden Star

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

The idea behind Arsenal Digital Holdings and Golden Star Acquisition 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.