Correlation Between Goldenstone Acquisition and Bt Brands

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

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

Diversification Opportunities for Goldenstone Acquisition and Bt Brands

0.22

Correlation Coefficient

Goldenstone Acquisition  Bt Brands

Modest diversification

The 3 months correlation between Goldenstone and BTBD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Goldenstone Acquisition Limite and Bt Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bt Brands and Goldenstone Acquisition 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 Goldenstone Acquisition Limited are associated (or correlated) with Bt Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bt Brands has no effect on the direction of Goldenstone Acquisition i.e., Goldenstone Acquisition and Bt Brands go up and down completely randomly.

Pair Corralation between Goldenstone Acquisition and Bt Brands

Assuming the 90 days horizon Goldenstone Acquisition Limited is expected to generate 25.02 times more return on investment than Bt Brands. However, Goldenstone Acquisition is 25.02 times more volatile than Bt Brands. It trades about 0.17 of its potential returns per unit of risk. Bt Brands is currently generating about 0.03 per unit of risk. If you would invest  1.20  in Goldenstone Acquisition Limited on October 10, 2024 and sell it today you would earn a total of  0.80  from holding Goldenstone Acquisition Limited or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	39.39%
Values	Daily Returns

Goldenstone Acquisition Limite  vs.  Bt Brands

Goldenstone Acquisition

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldenstone Acquisition Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Bt Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bt Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental drivers, Bt Brands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldenstone Acquisition and Bt Brands

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

The idea behind Goldenstone Acquisition Limited and Bt Brands 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.