Correlation Between Goodfellow and ADF

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

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

Diversification Opportunities for Goodfellow and ADF

0.66

Correlation Coefficient

Goodfellow  ADF

Poor diversification

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

Pair Corralation between Goodfellow and ADF

Assuming the 90 days trading horizon Goodfellow is expected to generate 0.47 times more return on investment than ADF. However, Goodfellow is 2.11 times less risky than ADF. It trades about -0.03 of its potential returns per unit of risk. ADF Group is currently generating about -0.1 per unit of risk. If you would invest  1,277  in Goodfellow on December 30, 2024 and sell it today you would lose (57.00) from holding Goodfellow or give up 4.46% of portfolio value over 90 days.

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

Goodfellow  vs.  ADF Group

Goodfellow

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goodfellow has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Goodfellow is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

ADF Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADF Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Goodfellow and ADF

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

The idea behind Goodfellow and ADF Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.