Correlation Between GLG LIFE and Sovereign Metals
Can any of the company-specific risk be diversified away by investing in both GLG LIFE and Sovereign Metals 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 GLG LIFE and Sovereign Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GLG LIFE TECH and Sovereign Metals Limited, you can compare the effects of market volatilities on GLG LIFE and Sovereign Metals 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 GLG LIFE with a short position of Sovereign Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and Sovereign Metals.
Diversification Opportunities for GLG LIFE and Sovereign Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between GLG and Sovereign is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and Sovereign Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sovereign Metals and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with Sovereign Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sovereign Metals has no effect on the direction of GLG LIFE i.e., GLG LIFE and Sovereign Metals go up and down completely randomly.
Pair Corralation between GLG LIFE and Sovereign Metals
Assuming the 90 days trading horizon GLG LIFE TECH is expected to generate 11.5 times more return on investment than Sovereign Metals. However, GLG LIFE is 11.5 times more volatile than Sovereign Metals Limited. It trades about 0.06 of its potential returns per unit of risk. Sovereign Metals Limited is currently generating about 0.05 per unit of risk. If you would invest 1.35 in GLG LIFE TECH on November 28, 2024 and sell it today you would earn a total of 0.65 from holding GLG LIFE TECH or generate 48.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GLG LIFE TECH vs. Sovereign Metals Limited
Performance |
| Timeline |
| GLG LIFE TECH |
| Sovereign Metals |
GLG LIFE and Sovereign Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GLG LIFE and Sovereign Metals
The main advantage of trading using opposite GLG LIFE and Sovereign Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, Sovereign Metals 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 Sovereign Metals will offset losses from the drop in Sovereign Metals' long position.| GLG LIFE vs. CompuGroup Medical SE | GLG LIFE vs. AAC TECHNOLOGHLDGADR | GLG LIFE vs. BioNTech SE | GLG LIFE vs. Genscript Biotech |
| Sovereign Metals vs. Xenia Hotels Resorts | Sovereign Metals vs. MHP Hotel AG | Sovereign Metals vs. Summit Hotel Properties | Sovereign Metals vs. JAPAN AIRLINES |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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