Correlation Between Vee SA and Globe Trade
Can any of the company-specific risk be diversified away by investing in both Vee SA and Globe Trade 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 Vee SA and Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vee SA and Globe Trade Centre, you can compare the effects of market volatilities on Vee SA and Globe Trade 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 Vee SA with a short position of Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vee SA and Globe Trade.
Diversification Opportunities for Vee SA and Globe Trade
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vee and Globe is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vee SA and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre and Vee SA 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 Vee SA are associated (or correlated) with Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Vee SA i.e., Vee SA and Globe Trade go up and down completely randomly.
Pair Corralation between Vee SA and Globe Trade
Assuming the 90 days trading horizon Vee SA is expected to under-perform the Globe Trade. In addition to that, Vee SA is 1.24 times more volatile than Globe Trade Centre. It trades about -0.18 of its total potential returns per unit of risk. Globe Trade Centre is currently generating about 0.03 per unit of volatility. If you would invest 413.00 in Globe Trade Centre on September 2, 2024 and sell it today you would earn a total of 13.00 from holding Globe Trade Centre or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Vee SA vs. Globe Trade Centre
Performance |
| Timeline |
| Vee SA |
| Globe Trade Centre |
Vee SA and Globe Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vee SA and Globe Trade
The main advantage of trading using opposite Vee SA and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vee SA position performs unexpectedly, Globe Trade 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 Trade will offset losses from the drop in Globe Trade's long position.The idea behind Vee SA and Globe Trade Centre 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.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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