Correlation Between Gold Ent and IFAN Financial

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

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

Diversification Opportunities for Gold Ent and IFAN Financial

0.4

Correlation Coefficient

Gold Ent  IFAN Financial

Very weak diversification

The 3 months correlation between Gold and IFAN is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Gold Ent Group and IFAN Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IFAN Financial and Gold Ent 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 Gold Ent Group are associated (or correlated) with IFAN Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IFAN Financial has no effect on the direction of Gold Ent i.e., Gold Ent and IFAN Financial go up and down completely randomly.

Pair Corralation between Gold Ent and IFAN Financial

Given the investment horizon of 90 days Gold Ent Group is expected to generate 1.06 times more return on investment than IFAN Financial. However, Gold Ent is 1.06 times more volatile than IFAN Financial. It trades about 0.08 of its potential returns per unit of risk. IFAN Financial is currently generating about 0.04 per unit of risk. If you would invest  0.02  in Gold Ent Group on December 27, 2024 and sell it today you would lose (0.01) from holding Gold Ent Group or give up 50.0% of portfolio value over 90 days.

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

Gold Ent Group  vs.  IFAN Financial

Gold Ent Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Ent Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Gold Ent reported solid returns over the last few months and may actually be approaching a breakup point.

IFAN Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IFAN Financial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, IFAN Financial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold Ent and IFAN Financial

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

The idea behind Gold Ent Group and IFAN Financial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.