Correlation Between Globe Trade and ED Invest
Can any of the company-specific risk be diversified away by investing in both Globe Trade and ED Invest 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 ED Invest 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 ED Invest SA, you can compare the effects of market volatilities on Globe Trade and ED Invest 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 ED Invest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and ED Invest.
Diversification Opportunities for Globe Trade and ED Invest
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Globe and EDI is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and ED Invest SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ED Invest 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 ED Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ED Invest SA has no effect on the direction of Globe Trade i.e., Globe Trade and ED Invest go up and down completely randomly.
Pair Corralation between Globe Trade and ED Invest
Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the ED Invest. But the stock apears to be less risky and, when comparing its historical volatility, Globe Trade Centre is 1.69 times less risky than ED Invest. The stock trades about -0.44 of its potential returns per unit of risk. The ED Invest SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 564.00 in ED Invest SA on September 13, 2024 and sell it today you would lose (14.00) from holding ED Invest SA or give up 2.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Globe Trade Centre vs. ED Invest SA
Performance |
| Timeline |
| Globe Trade Centre |
| ED Invest SA |
Globe Trade and ED Invest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globe Trade and ED Invest
The main advantage of trading using opposite Globe Trade and ED Invest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globe Trade position performs unexpectedly, ED Invest 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 ED Invest will offset losses from the drop in ED Invest's long position.| Globe Trade vs. Kool2play SA | Globe Trade vs. Medicofarma Biotech SA | Globe Trade vs. GreenX Metals | Globe Trade vs. Creotech Instruments SA |
| ED Invest vs. Live Motion Games | ED Invest vs. Centrum Finansowe Banku | ED Invest vs. UF Games SA | ED Invest vs. Globe Trade Centre |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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