Correlation Between Interpublic Group and Golden Heaven

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

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

Diversification Opportunities for Interpublic Group and Golden Heaven

-0.2

Correlation Coefficient

Interpublic Group  Golden Heaven

Good diversification

The 3 months correlation between Interpublic and Golden is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Interpublic Group of and Golden Heaven Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Heaven Group and Interpublic Group 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 Interpublic Group of are associated (or correlated) with Golden Heaven. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Heaven Group has no effect on the direction of Interpublic Group i.e., Interpublic Group and Golden Heaven go up and down completely randomly.

Pair Corralation between Interpublic Group and Golden Heaven

Considering the 90-day investment horizon Interpublic Group of is expected to generate 0.2 times more return on investment than Golden Heaven. However, Interpublic Group of is 5.07 times less risky than Golden Heaven. It trades about -0.03 of its potential returns per unit of risk. Golden Heaven Group is currently generating about -0.12 per unit of risk. If you would invest  3,148  in Interpublic Group of on October 25, 2024 and sell it today you would lose (327.00) from holding Interpublic Group of or give up 10.39% of portfolio value over 90 days.

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

Interpublic Group of  vs.  Golden Heaven Group

Interpublic Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Golden Heaven Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Heaven Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical indicators, Golden Heaven reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Interpublic Group and Golden Heaven

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

The idea behind Interpublic Group of and Golden Heaven Group 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.