Correlation Between Entravision Communications and GLG LIFE
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and GLG LIFE 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 Entravision Communications and GLG LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and GLG LIFE TECH, you can compare the effects of market volatilities on Entravision Communications and GLG LIFE 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 Entravision Communications with a short position of GLG LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and GLG LIFE.
Diversification Opportunities for Entravision Communications and GLG LIFE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Entravision and GLG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and GLG LIFE TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLG LIFE TECH and Entravision Communications 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 Entravision Communications are associated (or correlated) with GLG LIFE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLG LIFE TECH has no effect on the direction of Entravision Communications i.e., Entravision Communications and GLG LIFE go up and down completely randomly.
Pair Corralation between Entravision Communications and GLG LIFE
Assuming the 90 days horizon Entravision Communications is expected to under-perform the GLG LIFE. But the stock apears to be less risky and, when comparing its historical volatility, Entravision Communications is 11.75 times less risky than GLG LIFE. The stock trades about -0.01 of its potential returns per unit of risk. The GLG LIFE TECH is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.40 in GLG LIFE TECH on October 18, 2024 and sell it today you would earn a total of 0.60 from holding GLG LIFE TECH or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Entravision Communications vs. GLG LIFE TECH
Performance |
| Timeline |
| Entravision Communications |
| GLG LIFE TECH |
Entravision Communications and GLG LIFE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Entravision Communications and GLG LIFE
The main advantage of trading using opposite Entravision Communications and GLG LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, GLG LIFE 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 GLG LIFE will offset losses from the drop in GLG LIFE's long position.The idea behind Entravision Communications and GLG LIFE TECH 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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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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