Correlation Between Sekisui House and GOLD ROAD

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

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

Diversification Opportunities for Sekisui House and GOLD ROAD

-0.47

Correlation Coefficient

Sekisui House  GOLD ROAD

Very good diversification

The 3 months correlation between Sekisui and GOLD is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui House and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES and Sekisui House 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 Sekisui House are associated (or correlated) with GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of Sekisui House i.e., Sekisui House and GOLD ROAD go up and down completely randomly.

Pair Corralation between Sekisui House and GOLD ROAD

Assuming the 90 days trading horizon Sekisui House is expected to generate 2.55 times less return on investment than GOLD ROAD. But when comparing it to its historical volatility, Sekisui House is 2.58 times less risky than GOLD ROAD. It trades about 0.16 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  112.00  in GOLD ROAD RES on September 29, 2024 and sell it today you would earn a total of  10.00  from holding GOLD ROAD RES or generate 8.93% return on investment over 90 days.

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

Sekisui House  vs.  GOLD ROAD RES

Sekisui House

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sekisui House has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GOLD ROAD RES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GOLD ROAD RES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, GOLD ROAD exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sekisui House and GOLD ROAD

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

The idea behind Sekisui House and GOLD ROAD RES 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.