Correlation Between Various Eateries and Golden Metal

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

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

Diversification Opportunities for Various Eateries and Golden Metal

0.28

Correlation Coefficient

Various Eateries  Golden Metal

Modest diversification

The 3 months correlation between Various and Golden is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Various Eateries PLC and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources and Various Eateries 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 Various Eateries PLC are associated (or correlated) with Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Various Eateries i.e., Various Eateries and Golden Metal go up and down completely randomly.

Pair Corralation between Various Eateries and Golden Metal

Assuming the 90 days trading horizon Various Eateries PLC is expected to under-perform the Golden Metal. But the stock apears to be less risky and, when comparing its historical volatility, Various Eateries PLC is 6.12 times less risky than Golden Metal. The stock trades about -0.17 of its potential returns per unit of risk. The Golden Metal Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,100  in Golden Metal Resources on September 5, 2024 and sell it today you would earn a total of  1,000.00  from holding Golden Metal Resources or generate 47.62% return on investment over 90 days.

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

Various Eateries PLC  vs.  Golden Metal Resources

Various Eateries PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Various Eateries PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Various Eateries is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Golden Metal Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Metal Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Metal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Various Eateries and Golden Metal

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

The idea behind Various Eateries PLC and Golden Metal 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 Global Correlations module to find global opportunities by holding instruments from different markets.