Correlation Between SAIHEAT and Goldman Sachs

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

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

Diversification Opportunities for SAIHEAT and Goldman Sachs

0.62

Correlation Coefficient

SAIHEAT  Goldman Sachs

Poor diversification

The 3 months correlation between SAIHEAT and Goldman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SAIHEAT Limited and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs and SAIHEAT 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 SAIHEAT Limited are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of SAIHEAT i.e., SAIHEAT and Goldman Sachs go up and down completely randomly.

Pair Corralation between SAIHEAT and Goldman Sachs

Assuming the 90 days horizon SAIHEAT Limited is expected to under-perform the Goldman Sachs. In addition to that, SAIHEAT is 23.85 times more volatile than The Goldman Sachs. It trades about -0.03 of its total potential returns per unit of risk. The Goldman Sachs is currently generating about -0.02 per unit of volatility. If you would invest  2,370  in The Goldman Sachs on August 30, 2024 and sell it today you would lose (9.00) from holding The Goldman Sachs or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	43.48%
Values	Daily Returns

SAIHEAT Limited  vs.  The Goldman Sachs

SAIHEAT Limited

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days SAIHEAT Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly inconsistent technical indicators, SAIHEAT showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Goldman Sachs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Goldman Sachs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SAIHEAT and Goldman Sachs

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

The idea behind SAIHEAT Limited and The Goldman Sachs 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.