Correlation Between Golden Textiles and Speed Medical

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

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

Diversification Opportunities for Golden Textiles and Speed Medical

0.27

Correlation Coefficient

Golden Textiles  Speed Medical

Modest diversification

The 3 months correlation between Golden and Speed is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Golden Textiles Clothes and Speed Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Speed Medical and Golden Textiles 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 Textiles Clothes are associated (or correlated) with Speed Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Speed Medical has no effect on the direction of Golden Textiles i.e., Golden Textiles and Speed Medical go up and down completely randomly.

Pair Corralation between Golden Textiles and Speed Medical

Assuming the 90 days trading horizon Golden Textiles Clothes is expected to generate 1.34 times more return on investment than Speed Medical. However, Golden Textiles is 1.34 times more volatile than Speed Medical. It trades about 0.05 of its potential returns per unit of risk. Speed Medical is currently generating about 0.05 per unit of risk. If you would invest  2,643  in Golden Textiles Clothes on December 25, 2024 and sell it today you would earn a total of  158.00  from holding Golden Textiles Clothes or generate 5.98% return on investment over 90 days.

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

Golden Textiles Clothes  vs.  Speed Medical

Golden Textiles Clothes

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Textiles Clothes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Golden Textiles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Speed Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Speed Medical are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Speed Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Golden Textiles and Speed Medical

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

The idea behind Golden Textiles Clothes and Speed Medical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.