Correlation Between Gold River and Now Corp

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

By analyzing existing cross correlation between Gold River Prods and Now Corp, you can compare the effects of market volatilities on Gold River and Now Corp 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 River with a short position of Now Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold River and Now Corp.

Diversification Opportunities for Gold River and Now Corp

0.16

Correlation Coefficient

Gold River  Now Corp

Average diversification

The 3 months correlation between Gold and Now is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Gold River Prods and Now Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Corp and Gold River 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 River Prods are associated (or correlated) with Now Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Corp has no effect on the direction of Gold River i.e., Gold River and Now Corp go up and down completely randomly.

Pair Corralation between Gold River and Now Corp

Given the investment horizon of 90 days Gold River Prods is expected to under-perform the Now Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Gold River Prods is 20.46 times less risky than Now Corp. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Now Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Now Corp on September 13, 2024 and sell it today you would lose (0.01) from holding Now Corp or give up 50.0% of portfolio value over 90 days.

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

Gold River Prods  vs.  Now Corp

Gold River Prods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gold River Prods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Now Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Now Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Now Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gold River and Now Corp

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

The idea behind Gold River Prods and Now Corp 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 Valuation module to check real value of public entities based on technical and fundamental data.