Correlation Between Globe Trade and Amica SA
Can any of the company-specific risk be diversified away by investing in both Globe Trade and Amica SA 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 Amica SA 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 Amica SA, you can compare the effects of market volatilities on Globe Trade and Amica SA 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 Amica SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and Amica SA.
Diversification Opportunities for Globe Trade and Amica SA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globe and Amica is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Amica SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amica SA 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 Amica SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amica SA has no effect on the direction of Globe Trade i.e., Globe Trade and Amica SA go up and down completely randomly.
Pair Corralation between Globe Trade and Amica SA
Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the Amica SA. But the stock apears to be less risky and, when comparing its historical volatility, Globe Trade Centre is 1.51 times less risky than Amica SA. The stock trades about -0.22 of its potential returns per unit of risk. The Amica SA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,800 in Amica SA on September 1, 2024 and sell it today you would earn a total of 250.00 from holding Amica SA or generate 4.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Globe Trade Centre vs. Amica SA
Performance |
| Timeline |
| Globe Trade Centre |
| Amica SA |
Globe Trade and Amica SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and Amica SA
The main advantage of trading using opposite Globe Trade and Amica SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade position performs unexpectedly, Amica SA 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 Amica SA will offset losses from the drop in Amica SA's long position.The idea behind Globe Trade Centre and Amica SA 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.| Amica SA vs. Echo Investment SA | Amica SA vs. Esotiq Henderson SA | Amica SA vs. Asseco Business Solutions | Amica SA vs. Detalion Games 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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