Correlation Between EDP Renovaveis and Golden Star

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

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

Diversification Opportunities for EDP Renovaveis and Golden Star

0.5

Correlation Coefficient

EDP Renovaveis  Golden Star

Very weak diversification

The 3 months correlation between EDP and Golden is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding EDP Renovaveis and Golden Star Resource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Resource and EDP Renovaveis 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 EDP Renovaveis 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 Resource has no effect on the direction of EDP Renovaveis i.e., EDP Renovaveis and Golden Star go up and down completely randomly.

Pair Corralation between EDP Renovaveis and Golden Star

Assuming the 90 days horizon EDP Renovaveis is expected to generate 0.5 times more return on investment than Golden Star. However, EDP Renovaveis is 2.01 times less risky than Golden Star. It trades about -0.08 of its potential returns per unit of risk. Golden Star Resource is currently generating about -0.13 per unit of risk. If you would invest  1,001  in EDP Renovaveis on December 28, 2024 and sell it today you would lose (109.00) from holding EDP Renovaveis or give up 10.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

EDP Renovaveis  vs.  Golden Star Resource

EDP Renovaveis

Risk-Adjusted Performance

Very Weak

Over the last 90 days EDP Renovaveis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Golden Star Resource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Star Resource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with EDP Renovaveis and Golden Star

The main advantage of trading using opposite EDP Renovaveis and Golden Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EDP Renovaveis 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 EDP Renovaveis and Golden Star Resource 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.