Correlation Between Goodfood Market and Ramp Metals

Can any of the company-specific risk be diversified away by investing in both Goodfood Market and Ramp Metals 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 Goodfood Market and Ramp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goodfood Market Corp and Ramp Metals, you can compare the effects of market volatilities on Goodfood Market and Ramp Metals 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 Goodfood Market with a short position of Ramp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodfood Market and Ramp Metals.

Diversification Opportunities for Goodfood Market and Ramp Metals

0.33

Correlation Coefficient

Goodfood Market  Ramp Metals

Weak diversification

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

Pair Corralation between Goodfood Market and Ramp Metals

Assuming the 90 days trading horizon Goodfood Market Corp is expected to generate 1.12 times more return on investment than Ramp Metals. However, Goodfood Market is 1.12 times more volatile than Ramp Metals. It trades about 0.2 of its potential returns per unit of risk. Ramp Metals is currently generating about 0.18 per unit of risk. If you would invest  30.00  in Goodfood Market Corp on October 25, 2024 and sell it today you would earn a total of  21.00  from holding Goodfood Market Corp or generate 70.0% return on investment over 90 days.

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

Goodfood Market Corp  vs.  Ramp Metals

Goodfood Market Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Goodfood Market Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Goodfood Market displayed solid returns over the last few months and may actually be approaching a breakup point.

Ramp Metals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ramp Metals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Ramp Metals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goodfood Market and Ramp Metals

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

The idea behind Goodfood Market Corp and Ramp Metals 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.