Correlation Between Gold Bullion and Multi Units

Can any of the company-specific risk be diversified away by investing in both Gold Bullion and Multi Units 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 Gold Bullion and Multi Units into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gold Bullion Securities and Multi Units France, you can compare the effects of market volatilities on Gold Bullion and Multi Units 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 Gold Bullion with a short position of Multi Units. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Bullion and Multi Units.

Diversification Opportunities for Gold Bullion and Multi Units

0.72

Correlation Coefficient

Gold Bullion  Multi Units

Poor diversification

The 3 months correlation between Gold and Multi is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Gold Bullion Securities and Multi Units France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Units France and Gold Bullion 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 Gold Bullion Securities are associated (or correlated) with Multi Units. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Units France has no effect on the direction of Gold Bullion i.e., Gold Bullion and Multi Units go up and down completely randomly.

Pair Corralation between Gold Bullion and Multi Units

Assuming the 90 days trading horizon Gold Bullion Securities is expected to generate 1.15 times more return on investment than Multi Units. However, Gold Bullion is 1.15 times more volatile than Multi Units France. It trades about 0.2 of its potential returns per unit of risk. Multi Units France is currently generating about 0.16 per unit of risk. If you would invest  20,688  in Gold Bullion Securities on September 3, 2024 and sell it today you would earn a total of  2,491  from holding Gold Bullion Securities or generate 12.04% return on investment over 90 days.

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

Gold Bullion Securities  vs.  Multi Units France

Gold Bullion Securities

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gold Bullion Securities are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gold Bullion may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Multi Units France

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Units France are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Multi Units may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gold Bullion and Multi Units

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

The idea behind Gold Bullion Securities and Multi Units France 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.