Correlation Between Golden Matrix and NOVARTIS

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

Diversification Opportunities for Golden Matrix and NOVARTIS

-0.36

Correlation Coefficient

Golden Matrix  NOVARTIS

Very good diversification

The 3 months correlation between Golden and NOVARTIS is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Golden Matrix Group and NOVARTIS CAP P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAP P 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 NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAP P has no effect on the direction of Golden Matrix i.e., Golden Matrix and NOVARTIS go up and down completely randomly.

Pair Corralation between Golden Matrix and NOVARTIS

Given the investment horizon of 90 days Golden Matrix Group is expected to generate 5.39 times more return on investment than NOVARTIS. However, Golden Matrix is 5.39 times more volatile than NOVARTIS CAP P. It trades about -0.01 of its potential returns per unit of risk. NOVARTIS CAP P is currently generating about -0.14 per unit of risk. If you would invest  230.00  in Golden Matrix Group on September 14, 2024 and sell it today you would lose (25.00) from holding Golden Matrix Group or give up 10.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Golden Matrix Group  vs.  NOVARTIS CAP P

Golden Matrix Group

Risk-Adjusted Performance

0 of 100

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.

NOVARTIS CAP P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVARTIS CAP P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NOVARTIS CAP P investors.

Pair Trading with Golden Matrix and NOVARTIS

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

The idea behind Golden Matrix Group and NOVARTIS CAP P 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.