Correlation Between Goldenstone Acquisition and Summit Materials

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

Diversification Opportunities for Goldenstone Acquisition and Summit Materials

0.7

Correlation Coefficient

Goldenstone Acquisition  Summit Materials

Poor diversification

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

Pair Corralation between Goldenstone Acquisition and Summit Materials

Assuming the 90 days horizon Goldenstone Acquisition Limited is expected to generate 77.24 times more return on investment than Summit Materials. However, Goldenstone Acquisition is 77.24 times more volatile than Summit Materials. It trades about 0.24 of its potential returns per unit of risk. Summit Materials is currently generating about 0.29 per unit of risk. If you would invest  3.00  in Goldenstone Acquisition Limited on December 22, 2024 and sell it today you would earn a total of  6.99  from holding Goldenstone Acquisition Limited or generate 233.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.74%
Values	Daily Returns

Goldenstone Acquisition Limite  vs.  Summit Materials

Goldenstone Acquisition

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Goldenstone Acquisition Limited are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials

Risk-Adjusted Performance

Solid

Over the last 90 days Summit Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Summit Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Goldenstone Acquisition and Summit Materials

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

The idea behind Goldenstone Acquisition Limited and Summit Materials 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.