Correlation Between Golden Matrix and Alliance Recovery

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

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

Diversification Opportunities for Golden Matrix and Alliance Recovery

0.41

Correlation Coefficient

Golden Matrix  Alliance Recovery

Very weak diversification

The 3 months correlation between Golden and Alliance is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Golden Matrix Group and Alliance Recovery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Recovery and Golden Matrix 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 Golden Matrix Group are associated (or correlated) with Alliance Recovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Recovery has no effect on the direction of Golden Matrix i.e., Golden Matrix and Alliance Recovery go up and down completely randomly.

Pair Corralation between Golden Matrix and Alliance Recovery

Given the investment horizon of 90 days Golden Matrix is expected to generate 5.44 times less return on investment than Alliance Recovery. But when comparing it to its historical volatility, Golden Matrix Group is 2.15 times less risky than Alliance Recovery. It trades about 0.09 of its potential returns per unit of risk. Alliance Recovery is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  0.15  in Alliance Recovery on December 4, 2024 and sell it today you would earn a total of  0.12  from holding Alliance Recovery or generate 80.0% return on investment over 90 days.

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

Golden Matrix Group  vs.  Alliance Recovery

Golden Matrix Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Matrix Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Golden Matrix is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Alliance Recovery

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Golden Matrix and Alliance Recovery

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

The idea behind Golden Matrix Group and Alliance Recovery 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.