Correlation Between American Express and Goldenstone Acquisition

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Can any of the company-specific risk be diversified away by investing in both American Express and Goldenstone Acquisition 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 American Express and Goldenstone Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Express and Goldenstone Acquisition Limited, you can compare the effects of market volatilities on American Express and Goldenstone Acquisition 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 American Express with a short position of Goldenstone Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Express and Goldenstone Acquisition.

Diversification Opportunities for American Express and Goldenstone Acquisition

-0.31
  Correlation Coefficient

Very good diversification

The 3 months correlation between American and Goldenstone is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Goldenstone Acquisition Limite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldenstone Acquisition and American Express 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 American Express are associated (or correlated) with Goldenstone Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldenstone Acquisition has no effect on the direction of American Express i.e., American Express and Goldenstone Acquisition go up and down completely randomly.

Pair Corralation between American Express and Goldenstone Acquisition

Considering the 90-day investment horizon American Express is expected to generate 19.55 times less return on investment than Goldenstone Acquisition. But when comparing it to its historical volatility, American Express is 21.73 times less risky than Goldenstone Acquisition. It trades about 0.15 of its potential returns per unit of risk. Goldenstone Acquisition Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Goldenstone Acquisition Limited on September 18, 2024 and sell it today you would lose (0.20) from holding Goldenstone Acquisition Limited or give up 6.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy25.0%
ValuesDaily Returns

American Express  vs.  Goldenstone Acquisition Limite

 Performance 
       Timeline  
American Express 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in American Express are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, American Express reported solid returns over the last few months and may actually be approaching a breakup point.
Goldenstone Acquisition 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Goldenstone Acquisition Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Goldenstone Acquisition showed solid returns over the last few months and may actually be approaching a breakup point.

American Express and Goldenstone Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Express and Goldenstone Acquisition

The main advantage of trading using opposite American Express and Goldenstone Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express position performs unexpectedly, Goldenstone Acquisition 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 Goldenstone Acquisition will offset losses from the drop in Goldenstone Acquisition's long position.
The idea behind American Express and Goldenstone Acquisition Limited 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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