Correlation Between Golden Star and First Watch

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

Diversification Opportunities for Golden Star and First Watch

0.0

Correlation Coefficient

Golden Star  First Watch

Pay attention - limited upside

The 3 months correlation between Golden and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Golden Star Acquisition and First Watch Restaurant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Watch Restaurant 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 First Watch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Watch Restaurant has no effect on the direction of Golden Star i.e., Golden Star and First Watch go up and down completely randomly.

Pair Corralation between Golden Star and First Watch

If you would invest (100.00) in Golden Star Acquisition on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Golden Star Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Golden Star Acquisition  vs.  First Watch Restaurant

Golden Star Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Star Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Golden Star is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

First Watch Restaurant

Risk-Adjusted Performance

Very Weak

Over the last 90 days First Watch Restaurant has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, First Watch is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Golden Star and First Watch

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

The idea behind Golden Star Acquisition and First Watch Restaurant 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.