Correlation Between Garden Stage and Heritage Global

Can any of the company-specific risk be diversified away by investing in both Garden Stage and Heritage Global 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 Garden Stage and Heritage Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Garden Stage Limited and Heritage Global, you can compare the effects of market volatilities on Garden Stage and Heritage Global 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 Garden Stage with a short position of Heritage Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garden Stage and Heritage Global.

Diversification Opportunities for Garden Stage and Heritage Global

-0.15

Correlation Coefficient

Garden Stage  Heritage Global

Good diversification

The 3 months correlation between Garden and Heritage is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Garden Stage Limited and Heritage Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Global and Garden Stage 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 Garden Stage Limited are associated (or correlated) with Heritage Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Global has no effect on the direction of Garden Stage i.e., Garden Stage and Heritage Global go up and down completely randomly.

Pair Corralation between Garden Stage and Heritage Global

Given the investment horizon of 90 days Garden Stage Limited is expected to generate 15.65 times more return on investment than Heritage Global. However, Garden Stage is 15.65 times more volatile than Heritage Global. It trades about 0.04 of its potential returns per unit of risk. Heritage Global is currently generating about 0.07 per unit of risk. If you would invest  299.00  in Garden Stage Limited on September 13, 2024 and sell it today you would lose (238.57) from holding Garden Stage Limited or give up 79.79% of portfolio value over 90 days.

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

Garden Stage Limited  vs.  Heritage Global

Garden Stage Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Garden Stage Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Garden Stage showed solid returns over the last few months and may actually be approaching a breakup point.

Heritage Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Heritage Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Heritage Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Garden Stage and Heritage Global

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

The idea behind Garden Stage Limited and Heritage Global 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.