Correlation Between Golden Heaven and AKITA Drilling

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

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

Diversification Opportunities for Golden Heaven and AKITA Drilling

-0.84

Correlation Coefficient

Golden Heaven  AKITA Drilling

Pay attention - limited upside

The 3 months correlation between Golden and AKITA is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Golden Heaven Group and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling and Golden Heaven 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 Heaven Group are associated (or correlated) with AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Golden Heaven i.e., Golden Heaven and AKITA Drilling go up and down completely randomly.

Pair Corralation between Golden Heaven and AKITA Drilling

Given the investment horizon of 90 days Golden Heaven Group is expected to under-perform the AKITA Drilling. In addition to that, Golden Heaven is 3.01 times more volatile than AKITA Drilling. It trades about -0.2 of its total potential returns per unit of risk. AKITA Drilling is currently generating about 0.12 per unit of volatility. If you would invest  98.00  in AKITA Drilling on September 15, 2024 and sell it today you would earn a total of  17.00  from holding AKITA Drilling or generate 17.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Golden Heaven Group  vs.  AKITA Drilling

Golden Heaven Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Heaven Group 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 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.

AKITA Drilling

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AKITA Drilling are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AKITA Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Heaven and AKITA Drilling

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

The idea behind Golden Heaven Group and AKITA Drilling 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.