Correlation Between Goldman Sachs and Sino AG

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

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

Diversification Opportunities for Goldman Sachs and Sino AG

0.74

Correlation Coefficient

Goldman Sachs  Sino AG

Poor diversification

The 3 months correlation between Goldman and Sino is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Goldman Sachs and Sino AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sino AG and Goldman Sachs 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 The Goldman Sachs are associated (or correlated) with Sino AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sino AG has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Sino AG go up and down completely randomly.

Pair Corralation between Goldman Sachs and Sino AG

Assuming the 90 days horizon The Goldman Sachs is expected to generate 1.11 times more return on investment than Sino AG. However, Goldman Sachs is 1.11 times more volatile than Sino AG. It trades about 0.17 of its potential returns per unit of risk. Sino AG is currently generating about 0.14 per unit of risk. If you would invest  44,440  in The Goldman Sachs on September 3, 2024 and sell it today you would earn a total of  13,200  from holding The Goldman Sachs or generate 29.7% return on investment over 90 days.

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

The Goldman Sachs  vs.  Sino AG

Goldman Sachs

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Goldman Sachs reported solid returns over the last few months and may actually be approaching a breakup point.

Sino AG

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sino AG are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Sino AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Goldman Sachs and Sino AG

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

The idea behind The Goldman Sachs and Sino AG 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.