Correlation Between GOLDEN GUINEA and GUARANTY TRUST

Can any of the company-specific risk be diversified away by investing in both GOLDEN GUINEA and GUARANTY TRUST 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 GUINEA and GUARANTY TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GOLDEN GUINEA BREWERIES and GUARANTY TRUST HOLDING, you can compare the effects of market volatilities on GOLDEN GUINEA and GUARANTY TRUST 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 GUINEA with a short position of GUARANTY TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of GOLDEN GUINEA and GUARANTY TRUST.

Diversification Opportunities for GOLDEN GUINEA and GUARANTY TRUST

0.44

Correlation Coefficient

GOLDEN GUINEA  GUARANTY TRUST

Very weak diversification

The 3 months correlation between GOLDEN and GUARANTY is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GOLDEN GUINEA BREWERIES and GUARANTY TRUST HOLDING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUARANTY TRUST HOLDING and GOLDEN GUINEA 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 GUINEA BREWERIES are associated (or correlated) with GUARANTY TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUARANTY TRUST HOLDING has no effect on the direction of GOLDEN GUINEA i.e., GOLDEN GUINEA and GUARANTY TRUST go up and down completely randomly.

Pair Corralation between GOLDEN GUINEA and GUARANTY TRUST

Assuming the 90 days trading horizon GOLDEN GUINEA BREWERIES is expected to generate 1.86 times more return on investment than GUARANTY TRUST. However, GOLDEN GUINEA is 1.86 times more volatile than GUARANTY TRUST HOLDING. It trades about 0.3 of its potential returns per unit of risk. GUARANTY TRUST HOLDING is currently generating about 0.14 per unit of risk. If you would invest  315.00  in GOLDEN GUINEA BREWERIES on September 29, 2024 and sell it today you would earn a total of  549.00  from holding GOLDEN GUINEA BREWERIES or generate 174.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

GOLDEN GUINEA BREWERIES  vs.  GUARANTY TRUST HOLDING

GOLDEN GUINEA BREWERIES

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDEN GUINEA BREWERIES are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, GOLDEN GUINEA exhibited solid returns over the last few months and may actually be approaching a breakup point.

GUARANTY TRUST HOLDING

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GUARANTY TRUST HOLDING are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, GUARANTY TRUST displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GOLDEN GUINEA and GUARANTY TRUST

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

The idea behind GOLDEN GUINEA BREWERIES and GUARANTY TRUST HOLDING 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.