Correlation Between GLG LIFE and H-FARM SPA

Can any of the company-specific risk be diversified away by investing in both GLG LIFE and H-FARM SPA 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 GLG LIFE and H-FARM SPA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLG LIFE TECH and H FARM SPA, you can compare the effects of market volatilities on GLG LIFE and H-FARM SPA 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 GLG LIFE with a short position of H-FARM SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLG LIFE and H-FARM SPA.

Diversification Opportunities for GLG LIFE and H-FARM SPA

0.0

Correlation Coefficient

GLG LIFE  H-FARM SPA

Pay attention - limited upside

The 3 months correlation between GLG and H-FARM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GLG LIFE TECH and H FARM SPA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H FARM SPA and GLG LIFE 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 GLG LIFE TECH are associated (or correlated) with H-FARM SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H FARM SPA has no effect on the direction of GLG LIFE i.e., GLG LIFE and H-FARM SPA go up and down completely randomly.

Pair Corralation between GLG LIFE and H-FARM SPA

If you would invest  12.00  in H FARM SPA on December 21, 2024 and sell it today you would earn a total of  1.00  from holding H FARM SPA or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

GLG LIFE TECH  vs.  H FARM SPA

GLG LIFE TECH

Risk-Adjusted Performance

Very Weak

Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

H FARM SPA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in H FARM SPA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, H-FARM SPA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GLG LIFE and H-FARM SPA

The main advantage of trading using opposite GLG LIFE and H-FARM SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLG LIFE position performs unexpectedly, H-FARM SPA 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 H-FARM SPA will offset losses from the drop in H-FARM SPA's long position.

The idea behind GLG LIFE TECH and H FARM SPA 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.