Correlation Between Golden Ventures and Lease IT

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

By analyzing existing cross correlation between Golden Ventures Leasehold and Lease IT Public, you can compare the effects of market volatilities on Golden Ventures and Lease IT 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 Ventures with a short position of Lease IT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ventures and Lease IT.

Diversification Opportunities for Golden Ventures and Lease IT

0.02

Correlation Coefficient

Golden Ventures  Lease IT

Significant diversification

The 3 months correlation between Golden and Lease is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ventures Leasehold and Lease IT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lease IT Public and Golden Ventures 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 Ventures Leasehold are associated (or correlated) with Lease IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lease IT Public has no effect on the direction of Golden Ventures i.e., Golden Ventures and Lease IT go up and down completely randomly.

Pair Corralation between Golden Ventures and Lease IT

Assuming the 90 days trading horizon Golden Ventures Leasehold is expected to generate 0.5 times more return on investment than Lease IT. However, Golden Ventures Leasehold is 2.01 times less risky than Lease IT. It trades about 0.02 of its potential returns per unit of risk. Lease IT Public is currently generating about -0.2 per unit of risk. If you would invest  664.00  in Golden Ventures Leasehold on September 14, 2024 and sell it today you would earn a total of  6.00  from holding Golden Ventures Leasehold or generate 0.9% return on investment over 90 days.

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

Golden Ventures Leasehold  vs.  Lease IT Public

Golden Ventures Leasehold

Risk-Adjusted Performance

1 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Ventures Leasehold are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Golden Ventures is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lease IT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lease IT Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Golden Ventures and Lease IT

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

The idea behind Golden Ventures Leasehold and Lease IT Public 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.