Correlation Between Technology One and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Technology One and Globe 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 Technology One and Globe Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Technology One and Globe Metals Mining, you can compare the effects of market volatilities on Technology One and Globe 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 Technology One with a short position of Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Technology One and Globe Metals.
Diversification Opportunities for Technology One and Globe Metals
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Technology and Globe is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Technology One and Globe Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Metals Mining and Technology One 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 Technology One are associated (or correlated) with Globe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Metals Mining has no effect on the direction of Technology One i.e., Technology One and Globe Metals go up and down completely randomly.
Pair Corralation between Technology One and Globe Metals
Assuming the 90 days trading horizon Technology One is expected to generate 0.28 times more return on investment than Globe Metals. However, Technology One is 3.55 times less risky than Globe Metals. It trades about -0.15 of its potential returns per unit of risk. Globe Metals Mining is currently generating about -0.08 per unit of risk. If you would invest 3,090 in Technology One on October 28, 2024 and sell it today you would lose (126.00) from holding Technology One or give up 4.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Technology One vs. Globe Metals Mining
Performance |
| Timeline |
| Technology One |
| Globe Metals Mining |
Technology One and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Technology One and Globe Metals
The main advantage of trading using opposite Technology One and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology One position performs unexpectedly, Globe 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 Globe Metals will offset losses from the drop in Globe Metals' long position.| Technology One vs. Legacy Iron Ore | Technology One vs. Vulcan Steel | Technology One vs. Air New Zealand | Technology One vs. Gold Road Resources |
| Globe Metals vs. Hansen Technologies | Globe Metals vs. Energy Technologies Limited | Globe Metals vs. WiseTech Global Limited | Globe Metals vs. Neurotech International |
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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