Correlation Between 00108WAF7 and Golden Agri-Resources

Can any of the company-specific risk be diversified away by investing in both 00108WAF7 and Golden Agri-Resources 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 00108WAF7 and Golden Agri-Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEP TEX INC and Golden Agri Resources, you can compare the effects of market volatilities on 00108WAF7 and Golden Agri-Resources 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 00108WAF7 with a short position of Golden Agri-Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of 00108WAF7 and Golden Agri-Resources.

Diversification Opportunities for 00108WAF7 and Golden Agri-Resources

-0.25

Correlation Coefficient

00108WAF7  Golden Agri-Resources

Very good diversification

The 3 months correlation between 00108WAF7 and Golden is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding AEP TEX INC and Golden Agri Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Agri Resources and 00108WAF7 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 AEP TEX INC are associated (or correlated) with Golden Agri-Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Agri Resources has no effect on the direction of 00108WAF7 i.e., 00108WAF7 and Golden Agri-Resources go up and down completely randomly.

Pair Corralation between 00108WAF7 and Golden Agri-Resources

Assuming the 90 days trading horizon AEP TEX INC is expected to generate 14.49 times more return on investment than Golden Agri-Resources. However, 00108WAF7 is 14.49 times more volatile than Golden Agri Resources. It trades about 0.12 of its potential returns per unit of risk. Golden Agri Resources is currently generating about 0.02 per unit of risk. If you would invest  7,856  in AEP TEX INC on November 29, 2024 and sell it today you would lose (317.00) from holding AEP TEX INC or give up 4.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.27%
Values	Daily Returns

AEP TEX INC  vs.  Golden Agri Resources

AEP TEX INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEP TEX INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAF7 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Golden Agri Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Agri Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Golden Agri-Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 00108WAF7 and Golden Agri-Resources

The main advantage of trading using opposite 00108WAF7 and Golden Agri-Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 00108WAF7 position performs unexpectedly, Golden Agri-Resources 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 Agri-Resources will offset losses from the drop in Golden Agri-Resources' long position.

The idea behind AEP TEX INC and Golden Agri Resources 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..