Correlation Between Golden Agri-Resources and Recursion Pharmaceuticals

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

Diversification Opportunities for Golden Agri-Resources and Recursion Pharmaceuticals

-0.12

Correlation Coefficient

Golden Agri-Resources  Recursion Pharmaceuticals

Good diversification

The 3 months correlation between Golden and Recursion is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Recursion Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recursion Pharmaceuticals and Golden Agri-Resources 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 Recursion Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recursion Pharmaceuticals has no effect on the direction of Golden Agri-Resources i.e., Golden Agri-Resources and Recursion Pharmaceuticals go up and down completely randomly.

Pair Corralation between Golden Agri-Resources and Recursion Pharmaceuticals

Assuming the 90 days horizon Golden Agri Resources is expected to generate 0.41 times more return on investment than Recursion Pharmaceuticals. However, Golden Agri Resources is 2.44 times less risky than Recursion Pharmaceuticals. It trades about -0.01 of its potential returns per unit of risk. Recursion Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  2,080  in Golden Agri Resources on December 29, 2024 and sell it today you would lose (81.00) from holding Golden Agri Resources or give up 3.89% of portfolio value over 90 days.

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

Golden Agri Resources  vs.  Recursion Pharmaceuticals

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

Recursion Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Recursion Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Recursion Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Golden Agri-Resources and Recursion Pharmaceuticals

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

The idea behind Golden Agri Resources and Recursion Pharmaceuticals 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.