Correlation Between Enter Air and Globe Trade
Can any of the company-specific risk be diversified away by investing in both Enter Air and Globe Trade 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 Enter Air and Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enter Air SA and Globe Trade Centre, you can compare the effects of market volatilities on Enter Air and Globe Trade 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 Enter Air with a short position of Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enter Air and Globe Trade.
Diversification Opportunities for Enter Air and Globe Trade
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Enter and Globe is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Enter Air SA and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre and Enter Air 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 Enter Air SA are associated (or correlated) with Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Enter Air i.e., Enter Air and Globe Trade go up and down completely randomly.
Pair Corralation between Enter Air and Globe Trade
Assuming the 90 days trading horizon Enter Air SA is expected to generate 0.9 times more return on investment than Globe Trade. However, Enter Air SA is 1.11 times less risky than Globe Trade. It trades about 0.09 of its potential returns per unit of risk. Globe Trade Centre is currently generating about -0.01 per unit of risk. If you would invest 2,392 in Enter Air SA on September 2, 2024 and sell it today you would earn a total of 3,478 from holding Enter Air SA or generate 145.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enter Air SA vs. Globe Trade Centre
Performance |
| Timeline |
| Enter Air SA |
| Globe Trade Centre |
Enter Air and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enter Air and Globe Trade
The main advantage of trading using opposite Enter Air and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enter Air position performs unexpectedly, Globe Trade 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 Globe Trade will offset losses from the drop in Globe Trade's long position.| Enter Air vs. Monnari Trade SA | Enter Air vs. Igoria Trade SA | Enter Air vs. Gaming Factory SA | Enter Air vs. Kool2play SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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