Correlation Between Goldman Sachs and Idx Risk-managed

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

By analyzing existing cross correlation between Goldman Sachs Technology and Idx Risk Managed Bitcoin, you can compare the effects of market volatilities on Goldman Sachs and Idx Risk-managed 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 Goldman Sachs with a short position of Idx Risk-managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Idx Risk-managed.

Diversification Opportunities for Goldman Sachs and Idx Risk-managed

0.83

Correlation Coefficient

Goldman Sachs  Idx Risk-managed

Very poor diversification

The 3 months correlation between Goldman and Idx is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Technology and Idx Risk Managed Bitcoin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idx Risk Managed and Goldman Sachs 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 Goldman Sachs Technology are associated (or correlated) with Idx Risk-managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idx Risk Managed has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Idx Risk-managed go up and down completely randomly.

Pair Corralation between Goldman Sachs and Idx Risk-managed

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.62 times less return on investment than Idx Risk-managed. But when comparing it to its historical volatility, Goldman Sachs Technology is 1.81 times less risky than Idx Risk-managed. It trades about 0.09 of its potential returns per unit of risk. Idx Risk Managed Bitcoin is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  487.00  in Idx Risk Managed Bitcoin on October 24, 2024 and sell it today you would earn a total of  473.00  from holding Idx Risk Managed Bitcoin or generate 97.13% return on investment over 90 days.

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

Goldman Sachs Technology  vs.  Idx Risk Managed Bitcoin

Goldman Sachs Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Technology are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Goldman Sachs may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Idx Risk Managed

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Idx Risk Managed Bitcoin are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Idx Risk-managed showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Idx Risk-managed

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

The idea behind Goldman Sachs Technology and Idx Risk Managed Bitcoin 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.