Correlation Between Goldman Sachs and Denali Capital

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

By analyzing existing cross correlation between Goldman Sachs Group and Denali Capital Acquisition, you can compare the effects of market volatilities on Goldman Sachs and Denali Capital 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 Denali Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Denali Capital.

Diversification Opportunities for Goldman Sachs and Denali Capital

0.65

Correlation Coefficient

Goldman Sachs  Denali Capital

Poor diversification

The 3 months correlation between Goldman and Denali is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Denali Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Capital Acqui 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 Goldman Sachs Group are associated (or correlated) with Denali Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Capital Acqui has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Denali Capital go up and down completely randomly.

Pair Corralation between Goldman Sachs and Denali Capital

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to generate 0.34 times more return on investment than Denali Capital. However, Goldman Sachs Group is 2.94 times less risky than Denali Capital. It trades about 0.1 of its potential returns per unit of risk. Denali Capital Acquisition is currently generating about 0.03 per unit of risk. If you would invest  29,756  in Goldman Sachs Group on October 5, 2024 and sell it today you would earn a total of  27,741  from holding Goldman Sachs Group or generate 93.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Goldman Sachs Group  vs.  Denali Capital Acquisition

Goldman Sachs Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Denali Capital Acqui

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Denali Capital Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Denali Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Goldman Sachs and Denali Capital

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

The idea behind Goldman Sachs Group and Denali Capital Acquisition 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.