Correlation Between Golden Ventures and Regional Container

Can any of the company-specific risk be diversified away by investing in both Golden Ventures and Regional Container 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 Golden Ventures and Regional Container into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Golden Ventures Leasehold and Regional Container Lines, you can compare the effects of market volatilities on Golden Ventures and Regional Container 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 Golden Ventures with a short position of Regional Container. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Ventures and Regional Container.

Diversification Opportunities for Golden Ventures and Regional Container

-0.08

Correlation Coefficient

Golden Ventures  Regional Container

Good diversification

The 3 months correlation between Golden and Regional is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Golden Ventures Leasehold and Regional Container Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Container Lines and Golden Ventures 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 Golden Ventures Leasehold are associated (or correlated) with Regional Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Container Lines has no effect on the direction of Golden Ventures i.e., Golden Ventures and Regional Container go up and down completely randomly.

Pair Corralation between Golden Ventures and Regional Container

Assuming the 90 days trading horizon Golden Ventures Leasehold is expected to under-perform the Regional Container. But the stock apears to be less risky and, when comparing its historical volatility, Golden Ventures Leasehold is 2.07 times less risky than Regional Container. The stock trades about -0.09 of its potential returns per unit of risk. The Regional Container Lines is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,650  in Regional Container Lines on September 24, 2024 and sell it today you would earn a total of  125.00  from holding Regional Container Lines or generate 4.72% return on investment over 90 days.

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

Golden Ventures Leasehold  vs.  Regional Container Lines

Golden Ventures Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ventures Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Golden Ventures is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Regional Container Lines

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Container Lines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, Regional Container sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Ventures and Regional Container

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

The idea behind Golden Ventures Leasehold and Regional Container Lines 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.