Correlation Between Life Time and Golden Star

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

By analyzing existing cross correlation between Life Time Group and Golden Star Acquisition, you can compare the effects of market volatilities on Life Time and Golden Star 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 Life Time with a short position of Golden Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Life Time and Golden Star.

Diversification Opportunities for Life Time and Golden Star

-0.52

Correlation Coefficient

Life Time  Golden Star

Excellent diversification

The 3 months correlation between Life and Golden is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Life Time Group and Golden Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Star Acquisition and Life Time 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 Life Time Group are associated (or correlated) with Golden Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Star Acquisition has no effect on the direction of Life Time i.e., Life Time and Golden Star go up and down completely randomly.

Pair Corralation between Life Time and Golden Star

Considering the 90-day investment horizon Life Time Group is expected to under-perform the Golden Star. But the stock apears to be less risky and, when comparing its historical volatility, Life Time Group is 1.05 times less risky than Golden Star. The stock trades about -0.04 of its potential returns per unit of risk. The Golden Star Acquisition is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,123  in Golden Star Acquisition on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Golden Star Acquisition or generate 2.32% return on investment over 90 days.

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

Life Time Group  vs.  Golden Star Acquisition

Life Time Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Time Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Life Time is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Golden Star Acquisition

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Golden Star Acquisition are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Golden Star is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Life Time and Golden Star

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

The idea behind Life Time Group and Golden Star Acquisition 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.