Correlation Between Golden Star and FIAC Old

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

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

Diversification Opportunities for Golden Star and FIAC Old

-0.48

Correlation Coefficient

Golden Star  FIAC Old

Very good diversification

The 3 months correlation between Golden and FIAC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Acquisition and FIAC Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIAC Old and Golden Star 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 Star Acquisition are associated (or correlated) with FIAC Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIAC Old has no effect on the direction of Golden Star i.e., Golden Star and FIAC Old go up and down completely randomly.

Pair Corralation between Golden Star and FIAC Old

Assuming the 90 days horizon Golden Star Acquisition is expected to generate 0.15 times more return on investment than FIAC Old. However, Golden Star Acquisition is 6.52 times less risky than FIAC Old. It trades about 0.02 of its potential returns per unit of risk. FIAC Old is currently generating about -0.09 per unit of risk. If you would invest  1,247  in Golden Star Acquisition on October 25, 2024 and sell it today you would lose (75.00) from holding Golden Star Acquisition or give up 6.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	18.64%
Values	Daily Returns

Golden Star Acquisition  vs.  FIAC Old

Golden Star Acquisition

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Star Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Golden Star may actually be approaching a critical reversion point that can send shares even higher in February 2025.

FIAC Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIAC Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Golden Star and FIAC Old

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

The idea behind Golden Star Acquisition and FIAC Old 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.