Correlation Between Globe Trade and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both Globe Trade and FLOW TRADERS 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 FLOW TRADERS 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 FLOW TRADERS LTD, you can compare the effects of market volatilities on Globe Trade and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and FLOW TRADERS.
Diversification Opportunities for Globe Trade and FLOW TRADERS
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Globe and FLOW is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Globe Trade i.e., Globe Trade and FLOW TRADERS go up and down completely randomly.
Pair Corralation between Globe Trade and FLOW TRADERS
Assuming the 90 days trading horizon Globe Trade is expected to generate 1.19 times less return on investment than FLOW TRADERS. In addition to that, Globe Trade is 1.11 times more volatile than FLOW TRADERS LTD. It trades about 0.03 of its total potential returns per unit of risk. FLOW TRADERS LTD is currently generating about 0.03 per unit of volatility. If you would invest 1,972 in FLOW TRADERS LTD on August 31, 2024 and sell it today you would earn a total of 136.00 from holding FLOW TRADERS LTD or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Globe Trade Centre vs. FLOW TRADERS LTD
Performance |
| Timeline |
| Globe Trade Centre |
| FLOW TRADERS LTD |
Globe Trade and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and FLOW TRADERS
The main advantage of trading using opposite Globe Trade and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| Globe Trade vs. SIVERS SEMICONDUCTORS AB | Globe Trade vs. Darden Restaurants | Globe Trade vs. Reliance Steel Aluminum | Globe Trade vs. Q2M Managementberatung AG |
| FLOW TRADERS vs. Chunghwa Telecom Co | FLOW TRADERS vs. Astral Foods Limited | FLOW TRADERS vs. Singapore Telecommunications Limited | FLOW TRADERS vs. Infrastrutture Wireless Italiane |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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