Correlation Between Golden Agri and Pond Technologies

Can any of the company-specific risk be diversified away by investing in both Golden Agri and Pond Technologies 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 Pond Technologies 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 Pond Technologies Holdings, you can compare the effects of market volatilities on Golden Agri and Pond Technologies 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 Pond Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri and Pond Technologies.

Diversification Opportunities for Golden Agri and Pond Technologies

-0.39

Correlation Coefficient

Golden Agri  Pond Technologies

Very good diversification

The 3 months correlation between Golden and Pond is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Pond Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pond Technologies 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 Pond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pond Technologies has no effect on the direction of Golden Agri i.e., Golden Agri and Pond Technologies go up and down completely randomly.

Pair Corralation between Golden Agri and Pond Technologies

Assuming the 90 days horizon Golden Agri is expected to generate 12.65 times less return on investment than Pond Technologies. But when comparing it to its historical volatility, Golden Agri Resources is 7.02 times less risky than Pond Technologies. It trades about 0.03 of its potential returns per unit of risk. Pond Technologies Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Pond Technologies Holdings on October 11, 2024 and sell it today you would lose (4.67) from holding Pond Technologies Holdings or give up 77.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	76.46%
Values	Daily Returns

Golden Agri Resources  vs.  Pond Technologies Holdings

Golden Agri Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Agri Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Golden Agri is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pond Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pond Technologies Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, Pond Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Agri and Pond Technologies

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

The idea behind Golden Agri Resources and Pond Technologies Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.