Correlation Between Cool and Globus Maritime
Can any of the company-specific risk be diversified away by investing in both Cool and Globus Maritime 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 Cool and Globus Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cool Company and Globus Maritime, you can compare the effects of market volatilities on Cool and Globus Maritime 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 Cool with a short position of Globus Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cool and Globus Maritime.
Diversification Opportunities for Cool and Globus Maritime
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cool and Globus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cool Company and Globus Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globus Maritime and Cool 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 Cool Company are associated (or correlated) with Globus Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globus Maritime has no effect on the direction of Cool i.e., Cool and Globus Maritime go up and down completely randomly.
Pair Corralation between Cool and Globus Maritime
Given the investment horizon of 90 days Cool Company is expected to under-perform the Globus Maritime. But the stock apears to be less risky and, when comparing its historical volatility, Cool Company is 1.19 times less risky than Globus Maritime. The stock trades about -0.18 of its potential returns per unit of risk. The Globus Maritime is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 137.00 in Globus Maritime on November 9, 2024 and sell it today you would earn a total of 1.00 from holding Globus Maritime or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cool Company vs. Globus Maritime
Performance |
| Timeline |
| Cool Company |
| Globus Maritime |
Cool and Globus Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cool and Globus Maritime
The main advantage of trading using opposite Cool and Globus Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cool position performs unexpectedly, Globus Maritime 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 Globus Maritime will offset losses from the drop in Globus Maritime's long position.| Cool vs. Primoris Services | Cool vs. Tritent International Agriculture | Cool vs. Mattel Inc | Cool vs. Hurco Companies |
| Globus Maritime vs. Seanergy Maritime Holdings | Globus Maritime vs. United Maritime | Globus Maritime vs. Performance Shipping | Globus Maritime vs. Castor Maritime |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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