Correlation Between Goldsun Building and Eternal Materials

Can any of the company-specific risk be diversified away by investing in both Goldsun Building and Eternal Materials 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 Goldsun Building and Eternal Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldsun Building Materials and Eternal Materials Co, you can compare the effects of market volatilities on Goldsun Building and Eternal Materials 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 Goldsun Building with a short position of Eternal Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldsun Building and Eternal Materials.

Diversification Opportunities for Goldsun Building and Eternal Materials

-0.71

Correlation Coefficient

Goldsun Building  Eternal Materials

Pay attention - limited upside

The 3 months correlation between Goldsun and Eternal is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Goldsun Building Materials and Eternal Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Materials and Goldsun Building 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 Goldsun Building Materials are associated (or correlated) with Eternal Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Materials has no effect on the direction of Goldsun Building i.e., Goldsun Building and Eternal Materials go up and down completely randomly.

Pair Corralation between Goldsun Building and Eternal Materials

Assuming the 90 days trading horizon Goldsun Building Materials is expected to under-perform the Eternal Materials. In addition to that, Goldsun Building is 1.29 times more volatile than Eternal Materials Co. It trades about -0.02 of its total potential returns per unit of risk. Eternal Materials Co is currently generating about -0.02 per unit of volatility. If you would invest  3,060  in Eternal Materials Co on September 3, 2024 and sell it today you would lose (80.00) from holding Eternal Materials Co or give up 2.61% of portfolio value over 90 days.

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

Goldsun Building Materials  vs.  Eternal Materials Co

Goldsun Building Mat

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eternal Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Goldsun Building and Eternal Materials

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

The idea behind Goldsun Building Materials and Eternal Materials Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.