Correlation Between Golden Entertainment and MGM China

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

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

Diversification Opportunities for Golden Entertainment and MGM China

-0.7

Correlation Coefficient

Golden Entertainment  MGM China

Excellent diversification

The 3 months correlation between Golden and MGM is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Golden Entertainment and MGM China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGM China 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 MGM China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGM China Holdings has no effect on the direction of Golden Entertainment i.e., Golden Entertainment and MGM China go up and down completely randomly.

Pair Corralation between Golden Entertainment and MGM China

Given the investment horizon of 90 days Golden Entertainment is expected to under-perform the MGM China. But the stock apears to be less risky and, when comparing its historical volatility, Golden Entertainment is 2.71 times less risky than MGM China. The stock trades about -0.01 of its potential returns per unit of risk. The MGM China Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  116.00  in MGM China Holdings on September 14, 2024 and sell it today you would lose (11.00) from holding MGM China Holdings or give up 9.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	62.83%
Values	Daily Returns

Golden Entertainment  vs.  MGM China 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.

MGM China Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MGM China Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MGM China may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Golden Entertainment and MGM China

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

The idea behind Golden Entertainment and MGM China 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.