Correlation Between E Home and Golden Entertainment

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

By analyzing existing cross correlation between E Home Household Service and Golden Entertainment, you can compare the effects of market volatilities on E Home and Golden Entertainment 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 E Home with a short position of Golden Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Home and Golden Entertainment.

Diversification Opportunities for E Home and Golden Entertainment

-0.41

Correlation Coefficient

E Home  Golden Entertainment

Very good diversification

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

Pair Corralation between E Home and Golden Entertainment

Considering the 90-day investment horizon E Home Household Service is expected to under-perform the Golden Entertainment. In addition to that, E Home is 4.8 times more volatile than Golden Entertainment. It trades about -0.07 of its total potential returns per unit of risk. Golden Entertainment is currently generating about 0.0 per unit of volatility. If you would invest  3,503  in Golden Entertainment on October 21, 2024 and sell it today you would lose (280.00) from holding Golden Entertainment or give up 7.99% of portfolio value over 90 days.

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

E Home Household Service  vs.  Golden Entertainment

E Home Household

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E Home Household Service 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 forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Golden Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Golden Entertainment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with E Home and Golden Entertainment

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

The idea behind E Home Household Service and Golden Entertainment 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.