Correlation Between Aramark Holdings and Gold Ent

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

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

Diversification Opportunities for Aramark Holdings and Gold Ent

-0.33

Correlation Coefficient

Aramark Holdings  Gold Ent

Very good diversification

The 3 months correlation between Aramark and Gold is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Gold Ent Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Ent Group and Aramark Holdings 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 Aramark Holdings are associated (or correlated) with Gold Ent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Ent Group has no effect on the direction of Aramark Holdings i.e., Aramark Holdings and Gold Ent go up and down completely randomly.

Pair Corralation between Aramark Holdings and Gold Ent

Given the investment horizon of 90 days Aramark Holdings is expected to generate 88.15 times less return on investment than Gold Ent. But when comparing it to its historical volatility, Aramark Holdings is 19.23 times less risky than Gold Ent. It trades about 0.03 of its potential returns per unit of risk. Gold Ent Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Gold Ent Group on October 11, 2024 and sell it today you would lose (0.02) from holding Gold Ent Group or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Aramark Holdings  vs.  Gold Ent Group

Aramark Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aramark Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Aramark Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Gold Ent Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Ent Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Gold Ent reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aramark Holdings and Gold Ent

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

The idea behind Aramark Holdings and Gold Ent 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..