Correlation Between Graham Holdings and Golden Sun

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

By analyzing existing cross correlation between Graham Holdings Co and Golden Sun Education, you can compare the effects of market volatilities on Graham Holdings and Golden Sun 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 Graham Holdings with a short position of Golden Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and Golden Sun.

Diversification Opportunities for Graham Holdings and Golden Sun

-0.58

Correlation Coefficient

Graham Holdings  Golden Sun

Excellent diversification

The 3 months correlation between Graham and Golden is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and Golden Sun Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Sun Education and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with Golden Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Sun Education has no effect on the direction of Graham Holdings i.e., Graham Holdings and Golden Sun go up and down completely randomly.

Pair Corralation between Graham Holdings and Golden Sun

Considering the 90-day investment horizon Graham Holdings Co is expected to generate 0.37 times more return on investment than Golden Sun. However, Graham Holdings Co is 2.7 times less risky than Golden Sun. It trades about -0.1 of its potential returns per unit of risk. Golden Sun Education is currently generating about -0.07 per unit of risk. If you would invest  90,669  in Graham Holdings Co on September 21, 2024 and sell it today you would lose (3,652) from holding Graham Holdings Co or give up 4.03% of portfolio value over 90 days.

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

Graham Holdings Co  vs.  Golden Sun Education

Graham Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graham Holdings Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Graham Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Golden Sun Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Graham Holdings and Golden Sun

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

The idea behind Graham Holdings Co and Golden Sun Education 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.