Correlation Between GOLD ROAD and Television Broadcasts

Can any of the company-specific risk be diversified away by investing in both GOLD ROAD and Television Broadcasts 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 GOLD ROAD and Television Broadcasts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOLD ROAD RES and Television Broadcasts Limited, you can compare the effects of market volatilities on GOLD ROAD and Television Broadcasts 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 GOLD ROAD with a short position of Television Broadcasts. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLD ROAD and Television Broadcasts.

Diversification Opportunities for GOLD ROAD and Television Broadcasts

-0.4

Correlation Coefficient

GOLD ROAD  Television Broadcasts

Very good diversification

The 3 months correlation between GOLD and Television is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding GOLD ROAD RES and Television Broadcasts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Television Broadcasts and GOLD ROAD 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 GOLD ROAD RES are associated (or correlated) with Television Broadcasts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Television Broadcasts has no effect on the direction of GOLD ROAD i.e., GOLD ROAD and Television Broadcasts go up and down completely randomly.

Pair Corralation between GOLD ROAD and Television Broadcasts

Assuming the 90 days trading horizon GOLD ROAD RES is expected to generate 1.45 times more return on investment than Television Broadcasts. However, GOLD ROAD is 1.45 times more volatile than Television Broadcasts Limited. It trades about 0.2 of its potential returns per unit of risk. Television Broadcasts Limited is currently generating about 0.04 per unit of risk. If you would invest  114.00  in GOLD ROAD RES on October 25, 2024 and sell it today you would earn a total of  35.00  from holding GOLD ROAD RES or generate 30.7% return on investment over 90 days.

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

GOLD ROAD RES  vs.  Television Broadcasts Limited

GOLD ROAD RES

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Television Broadcasts

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Television Broadcasts Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Television Broadcasts 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 GOLD ROAD and Television Broadcasts

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

The idea behind GOLD ROAD RES and Television Broadcasts Limited 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.