Correlation Between Golden Entertainment and Banyan Tree

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

By analyzing existing cross correlation between Golden Entertainment and Banyan Tree Holdings, you can compare the effects of market volatilities on Golden Entertainment and Banyan Tree 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 Entertainment with a short position of Banyan Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Entertainment and Banyan Tree.

Diversification Opportunities for Golden Entertainment and Banyan Tree

-0.25

Correlation Coefficient

Golden Entertainment  Banyan Tree

Very good diversification

The 3 months correlation between Golden and Banyan is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment and Banyan Tree Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banyan Tree Holdings and Golden Entertainment 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 Entertainment are associated (or correlated) with Banyan Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banyan Tree Holdings has no effect on the direction of Golden Entertainment i.e., Golden Entertainment and Banyan Tree go up and down completely randomly.

Pair Corralation between Golden Entertainment and Banyan Tree

Given the investment horizon of 90 days Golden Entertainment is expected to generate 0.17 times more return on investment than Banyan Tree. However, Golden Entertainment is 6.02 times less risky than Banyan Tree. It trades about 0.04 of its potential returns per unit of risk. Banyan Tree Holdings is currently generating about -0.09 per unit of risk. If you would invest  3,201  in Golden Entertainment on September 14, 2024 and sell it today you would earn a total of  118.00  from holding Golden Entertainment or generate 3.69% return on investment over 90 days.

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

Golden Entertainment  vs.  Banyan Tree Holdings

Golden Entertainment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Entertainment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Golden Entertainment is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Banyan Tree Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banyan Tree Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Golden Entertainment and Banyan Tree

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

The idea behind Golden Entertainment and Banyan Tree 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.