Correlation Between Golden Heaven and Vista Outdoor

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

Diversification Opportunities for Golden Heaven and Vista Outdoor

-0.66

Correlation Coefficient

Golden Heaven  Vista Outdoor

Excellent diversification

The 3 months correlation between Golden and Vista is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Golden Heaven Group and Vista Outdoor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vista Outdoor 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 Vista Outdoor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vista Outdoor has no effect on the direction of Golden Heaven i.e., Golden Heaven and Vista Outdoor go up and down completely randomly.

Pair Corralation between Golden Heaven and Vista Outdoor

Given the investment horizon of 90 days Golden Heaven Group is expected to under-perform the Vista Outdoor. In addition to that, Golden Heaven is 27.39 times more volatile than Vista Outdoor. It trades about -0.12 of its total potential returns per unit of risk. Vista Outdoor is currently generating about 0.14 per unit of volatility. If you would invest  4,418  in Vista Outdoor on September 16, 2024 and sell it today you would earn a total of  45.00  from holding Vista Outdoor or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	72.09%
Values	Daily Returns

Golden Heaven Group  vs.  Vista Outdoor

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.

Vista Outdoor

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Vista Outdoor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Vista Outdoor displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Heaven and Vista Outdoor

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

The idea behind Golden Heaven Group and Vista Outdoor 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.