Correlation Between Lease IT and Golden Ventures

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

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

Diversification Opportunities for Lease IT and Golden Ventures

-0.1

Correlation Coefficient

Lease IT  Golden Ventures

Good diversification

The 3 months correlation between Lease and Golden is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lease IT Public and Golden Ventures Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ventures Leasehold and Lease IT 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 Lease IT Public are associated (or correlated) with Golden Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ventures Leasehold has no effect on the direction of Lease IT i.e., Lease IT and Golden Ventures go up and down completely randomly.

Pair Corralation between Lease IT and Golden Ventures

Assuming the 90 days trading horizon Lease IT Public is expected to under-perform the Golden Ventures. In addition to that, Lease IT is 2.47 times more volatile than Golden Ventures Leasehold. It trades about -0.28 of its total potential returns per unit of risk. Golden Ventures Leasehold is currently generating about 0.01 per unit of volatility. If you would invest  664.00  in Golden Ventures Leasehold on October 20, 2024 and sell it today you would earn a total of  1.00  from holding Golden Ventures Leasehold or generate 0.15% return on investment over 90 days.

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

Lease IT Public  vs.  Golden Ventures Leasehold

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Golden Ventures Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ventures Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Lease IT and Golden Ventures

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

The idea behind Lease IT Public and Golden Ventures Leasehold 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 Transaction History module to view history of all your transactions and understand their impact on performance.