Correlation Between Golden Agri and Rumble

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

Diversification Opportunities for Golden Agri and Rumble

-0.26

Correlation Coefficient

Golden Agri  Rumble

Very good diversification

The 3 months correlation between Golden and Rumble is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Rumble Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rumble Inc 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 Rumble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rumble Inc has no effect on the direction of Golden Agri i.e., Golden Agri and Rumble go up and down completely randomly.

Pair Corralation between Golden Agri and Rumble

Assuming the 90 days horizon Golden Agri Resources is expected to under-perform the Rumble. But the pink sheet apears to be less risky and, when comparing its historical volatility, Golden Agri Resources is 13.48 times less risky than Rumble. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Rumble Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  561.00  in Rumble Inc on October 20, 2024 and sell it today you would earn a total of  729.00  from holding Rumble Inc or generate 129.95% return on investment over 90 days.

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

Golden Agri Resources  vs.  Rumble Inc

Golden Agri Resources

Risk-Adjusted Performance

0 of 100

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 fairly strong basic indicators, Golden Agri is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Rumble Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Rumble Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Rumble displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Agri and Rumble

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

The idea behind Golden Agri Resources and Rumble Inc 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.