Correlation Between Globe Trade and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Globe Trade and Adriatic 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 Globe Trade and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Trade Centre and Adriatic Metals Plc, you can compare the effects of market volatilities on Globe Trade and Adriatic 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 Globe Trade with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and Adriatic Metals.
Diversification Opportunities for Globe Trade and Adriatic Metals
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Globe and Adriatic is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Adriatic Metals Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals Plc and Globe Trade 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 Globe Trade Centre are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals Plc has no effect on the direction of Globe Trade i.e., Globe Trade and Adriatic Metals go up and down completely randomly.
Pair Corralation between Globe Trade and Adriatic Metals
Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the Adriatic Metals. But the stock apears to be less risky and, when comparing its historical volatility, Globe Trade Centre is 10.36 times less risky than Adriatic Metals. The stock trades about -0.21 of its potential returns per unit of risk. The Adriatic Metals Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 246.00 in Adriatic Metals Plc on August 29, 2024 and sell it today you would earn a total of 4.00 from holding Adriatic Metals Plc or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Trade Centre vs. Adriatic Metals Plc
Performance |
| Timeline |
| Globe Trade Centre |
| Adriatic Metals Plc |
Globe Trade and Adriatic Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and Adriatic Metals
The main advantage of trading using opposite Globe Trade and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade position performs unexpectedly, Adriatic 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.| Globe Trade vs. Corporate Office Properties | Globe Trade vs. TSOGO SUN GAMING | Globe Trade vs. DFS Furniture PLC | Globe Trade vs. FUTURE GAMING GRP |
| Adriatic Metals vs. Globe Trade Centre | Adriatic Metals vs. CONAGRA FOODS | Adriatic Metals vs. PT Indofood Sukses | Adriatic Metals vs. Food Life Companies |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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