Correlation Between Goldman Sachs and GUOTAI JUNAN

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and GUOTAI JUNAN 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 Goldman Sachs and GUOTAI JUNAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Goldman Sachs and GUOTAI JUNAN SEC, you can compare the effects of market volatilities on Goldman Sachs and GUOTAI JUNAN 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 Goldman Sachs with a short position of GUOTAI JUNAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and GUOTAI JUNAN.

Diversification Opportunities for Goldman Sachs and GUOTAI JUNAN

0.15

Correlation Coefficient

Goldman Sachs  GUOTAI JUNAN

Average diversification

The 3 months correlation between Goldman and GUOTAI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and GUOTAI JUNAN SEC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUOTAI JUNAN SEC and Goldman Sachs 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 The Goldman Sachs are associated (or correlated) with GUOTAI JUNAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUOTAI JUNAN SEC has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and GUOTAI JUNAN go up and down completely randomly.

Pair Corralation between Goldman Sachs and GUOTAI JUNAN

Assuming the 90 days horizon Goldman Sachs is expected to generate 1.29 times less return on investment than GUOTAI JUNAN. But when comparing it to its historical volatility, The Goldman Sachs is 2.31 times less risky than GUOTAI JUNAN. It trades about 0.16 of its potential returns per unit of risk. GUOTAI JUNAN SEC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  95.00  in GUOTAI JUNAN SEC on October 24, 2024 and sell it today you would earn a total of  34.00  from holding GUOTAI JUNAN SEC or generate 35.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.78%
Values	Daily Returns

The Goldman Sachs  vs.  GUOTAI JUNAN SEC

Goldman Sachs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

GUOTAI JUNAN SEC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goldman Sachs and GUOTAI JUNAN

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

The idea behind The Goldman Sachs and GUOTAI JUNAN SEC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.