Correlation Between Golden Energy and BranchOut Food

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

By analyzing existing cross correlation between Golden Energy Offshore and BranchOut Food Common, you can compare the effects of market volatilities on Golden Energy and BranchOut Food 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 Energy with a short position of BranchOut Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Energy and BranchOut Food.

Diversification Opportunities for Golden Energy and BranchOut Food

0.4

Correlation Coefficient

Golden Energy  BranchOut Food

Very weak diversification

The 3 months correlation between Golden and BranchOut is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Golden Energy Offshore and BranchOut Food Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BranchOut Food Common and Golden Energy 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 Energy Offshore are associated (or correlated) with BranchOut Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BranchOut Food Common has no effect on the direction of Golden Energy i.e., Golden Energy and BranchOut Food go up and down completely randomly.

Pair Corralation between Golden Energy and BranchOut Food

Assuming the 90 days horizon Golden Energy Offshore is expected to generate 0.51 times more return on investment than BranchOut Food. However, Golden Energy Offshore is 1.98 times less risky than BranchOut Food. It trades about -0.02 of its potential returns per unit of risk. BranchOut Food Common is currently generating about -0.01 per unit of risk. If you would invest  170.00  in Golden Energy Offshore on February 3, 2025 and sell it today you would lose (10.00) from holding Golden Energy Offshore or give up 5.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Golden Energy Offshore  vs.  BranchOut Food Common

Golden Energy Offshore

Risk-Adjusted Performance

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Golden Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BranchOut Food Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days BranchOut Food Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, BranchOut Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Golden Energy and BranchOut Food

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

The idea behind Golden Energy Offshore and BranchOut Food Common 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.