Correlation Between Hanan Mor and Golden House

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

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

Diversification Opportunities for Hanan Mor and Golden House

0.92

Correlation Coefficient

Hanan Mor  Golden House

Almost no diversification

The 3 months correlation between Hanan and Golden is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hanan Mor and Golden House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden House and Hanan Mor 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 Hanan Mor are associated (or correlated) with Golden House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden House has no effect on the direction of Hanan Mor i.e., Hanan Mor and Golden House go up and down completely randomly.

Pair Corralation between Hanan Mor and Golden House

Assuming the 90 days trading horizon Hanan Mor is expected to under-perform the Golden House. In addition to that, Hanan Mor is 2.08 times more volatile than Golden House. It trades about -0.28 of its total potential returns per unit of risk. Golden House is currently generating about 0.11 per unit of volatility. If you would invest  229,100  in Golden House on November 19, 2024 and sell it today you would earn a total of  6,500  from holding Golden House or generate 2.84% return on investment over 90 days.

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

Hanan Mor  vs.  Golden House

Hanan Mor

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hanan Mor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanan Mor sustained solid returns over the last few months and may actually be approaching a breakup point.

Golden House

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golden House are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Golden House sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanan Mor and Golden House

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

The idea behind Hanan Mor and Golden House 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.