Correlation Between Garden Stage and Top KingWin

Can any of the company-specific risk be diversified away by investing in both Garden Stage and Top KingWin 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 Top KingWin 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 Top KingWin, you can compare the effects of market volatilities on Garden Stage and Top KingWin 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 Top KingWin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garden Stage and Top KingWin.

Diversification Opportunities for Garden Stage and Top KingWin

-0.35

Correlation Coefficient

Garden Stage  Top KingWin

Very good diversification

The 3 months correlation between Garden and Top is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Garden Stage Limited and Top KingWin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Top KingWin 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 Top KingWin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Top KingWin has no effect on the direction of Garden Stage i.e., Garden Stage and Top KingWin go up and down completely randomly.

Pair Corralation between Garden Stage and Top KingWin

Given the investment horizon of 90 days Garden Stage Limited is expected to under-perform the Top KingWin. But the stock apears to be less risky and, when comparing its historical volatility, Garden Stage Limited is 2.97 times less risky than Top KingWin. The stock trades about -0.11 of its potential returns per unit of risk. The Top KingWin is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  50.00  in Top KingWin on September 12, 2024 and sell it today you would lose (11.00) from holding Top KingWin or give up 22.0% 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.  Top KingWin

Garden Stage Limited

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Garden Stage Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly conflicting forward indicators, Garden Stage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Top KingWin

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Top KingWin are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Top KingWin demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Garden Stage and Top KingWin

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

The idea behind Garden Stage Limited and Top KingWin 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.

Check out your portfolio center.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.