Correlation Between Idx Risk and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both Idx Risk and Goldman Sachs 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 Idx Risk and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Idx Risk Managed Bitcoin and Goldman Sachs Clean, you can compare the effects of market volatilities on Idx Risk and Goldman Sachs 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 Idx Risk with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Idx Risk and Goldman Sachs.

Diversification Opportunities for Idx Risk and Goldman Sachs

-0.83

Correlation Coefficient

Idx Risk  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Idx and Goldman is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Idx Risk Managed Bitcoin and Goldman Sachs Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Clean and Idx Risk 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 Idx Risk Managed Bitcoin are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Clean has no effect on the direction of Idx Risk i.e., Idx Risk and Goldman Sachs go up and down completely randomly.

Pair Corralation between Idx Risk and Goldman Sachs

Assuming the 90 days horizon Idx Risk Managed Bitcoin is expected to generate 3.17 times more return on investment than Goldman Sachs. However, Idx Risk is 3.17 times more volatile than Goldman Sachs Clean. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Clean is currently generating about -0.26 per unit of risk. If you would invest  778.00  in Idx Risk Managed Bitcoin on September 16, 2024 and sell it today you would earn a total of  211.00  from holding Idx Risk Managed Bitcoin or generate 27.12% return on investment over 90 days.

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

Idx Risk Managed Bitcoin  vs.  Goldman Sachs Clean

Idx Risk Managed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Idx Risk Managed Bitcoin are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Idx Risk showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Clean has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Idx Risk and Goldman Sachs

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

The idea behind Idx Risk Managed Bitcoin and Goldman Sachs Clean 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.