Correlation Between Westshore Terminals and Golden Pursuit

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

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

Diversification Opportunities for Westshore Terminals and Golden Pursuit

0.23

Correlation Coefficient

Westshore Terminals  Golden Pursuit

Modest diversification

The 3 months correlation between Westshore and Golden is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Westshore Terminals Investment and Golden Pursuit Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Pursuit Resources and Westshore Terminals 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 Westshore Terminals Investment are associated (or correlated) with Golden Pursuit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Pursuit Resources has no effect on the direction of Westshore Terminals i.e., Westshore Terminals and Golden Pursuit go up and down completely randomly.

Pair Corralation between Westshore Terminals and Golden Pursuit

Assuming the 90 days trading horizon Westshore Terminals is expected to generate 6.67 times less return on investment than Golden Pursuit. But when comparing it to its historical volatility, Westshore Terminals Investment is 3.64 times less risky than Golden Pursuit. It trades about 0.01 of its potential returns per unit of risk. Golden Pursuit Resources is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Golden Pursuit Resources on October 11, 2024 and sell it today you would lose (5.00) from holding Golden Pursuit Resources or give up 21.74% of portfolio value over 90 days.

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

Westshore Terminals Investment  vs.  Golden Pursuit Resources

Westshore Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westshore Terminals Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Westshore Terminals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Golden Pursuit Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Pursuit Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Golden Pursuit is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Westshore Terminals and Golden Pursuit

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

The idea behind Westshore Terminals Investment and Golden Pursuit 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.