Correlation Between Globe Metals and Advanced Braking
Can any of the company-specific risk be diversified away by investing in both Globe Metals and Advanced Braking 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 Metals and Advanced Braking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globe Metals Mining and Advanced Braking Technology, you can compare the effects of market volatilities on Globe Metals and Advanced Braking 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 Metals with a short position of Advanced Braking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Metals and Advanced Braking.
Diversification Opportunities for Globe Metals and Advanced Braking
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globe and Advanced is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Globe Metals Mining and Advanced Braking Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Braking Tec and Globe Metals 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 Metals Mining are associated (or correlated) with Advanced Braking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Braking Tec has no effect on the direction of Globe Metals i.e., Globe Metals and Advanced Braking go up and down completely randomly.
Pair Corralation between Globe Metals and Advanced Braking
Assuming the 90 days trading horizon Globe Metals Mining is expected to under-perform the Advanced Braking. In addition to that, Globe Metals is 2.39 times more volatile than Advanced Braking Technology. It trades about -0.03 of its total potential returns per unit of risk. Advanced Braking Technology is currently generating about 0.07 per unit of volatility. If you would invest 8.10 in Advanced Braking Technology on October 20, 2024 and sell it today you would earn a total of 0.20 from holding Advanced Braking Technology or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Globe Metals Mining vs. Advanced Braking Technology
Performance |
| Timeline |
| Globe Metals Mining |
| Advanced Braking Tec |
Globe Metals and Advanced Braking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Metals and Advanced Braking
The main advantage of trading using opposite Globe Metals and Advanced Braking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Metals position performs unexpectedly, Advanced Braking 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 Advanced Braking will offset losses from the drop in Advanced Braking's long position.| Globe Metals vs. Iron Road | Globe Metals vs. The Environmental Group | Globe Metals vs. Centaurus Metals | Globe Metals vs. Ironbark Capital |
| Advanced Braking vs. Hotel Property Investments | Advanced Braking vs. Beston Global Food | Advanced Braking vs. Aussie Broadband | Advanced Braking vs. Autosports Group |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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