Correlation Between Golden Agri and GLG Life

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

By analyzing existing cross correlation between Golden Agri Resources and GLG Life Tech, you can compare the effects of market volatilities on Golden Agri and GLG Life 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 Golden Agri with a short position of GLG Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri and GLG Life.

Diversification Opportunities for Golden Agri and GLG Life

0.0

Correlation Coefficient

Golden Agri  GLG Life

Pay attention - limited upside

The 3 months correlation between Golden and GLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and GLG Life Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG Life Tech and Golden Agri 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 Golden Agri Resources are associated (or correlated) with GLG Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG Life Tech has no effect on the direction of Golden Agri i.e., Golden Agri and GLG Life go up and down completely randomly.

Pair Corralation between Golden Agri and GLG Life

If you would invest (100.00) in GLG Life Tech on December 19, 2024 and sell it today you would earn a total of  100.00  from holding GLG Life Tech or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Golden Agri Resources  vs.  GLG Life Tech

Golden Agri Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Agri Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GLG Life Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days GLG Life Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, GLG Life is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Golden Agri and GLG Life

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

The idea behind Golden Agri Resources and GLG Life Tech 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.