Correlation Between Cardinal Small and Glg Intl

Can any of the company-specific risk be diversified away by investing in both Cardinal Small and Glg Intl 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 Cardinal Small and Glg Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cardinal Small Cap and Glg Intl Small, you can compare the effects of market volatilities on Cardinal Small and Glg Intl 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 Cardinal Small with a short position of Glg Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardinal Small and Glg Intl.

Diversification Opportunities for Cardinal Small and Glg Intl

0.55

Correlation Coefficient

Cardinal Small  Glg Intl

Very weak diversification

The 3 months correlation between Cardinal and Glg is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and Glg Intl Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glg Intl Small and Cardinal Small 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 Cardinal Small Cap are associated (or correlated) with Glg Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glg Intl Small has no effect on the direction of Cardinal Small i.e., Cardinal Small and Glg Intl go up and down completely randomly.

Pair Corralation between Cardinal Small and Glg Intl

Assuming the 90 days horizon Cardinal Small is expected to generate 44.64 times less return on investment than Glg Intl. But when comparing it to its historical volatility, Cardinal Small Cap is 61.58 times less risky than Glg Intl. It trades about 0.22 of its potential returns per unit of risk. Glg Intl Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7,993  in Glg Intl Small on September 14, 2024 and sell it today you would earn a total of  754.00  from holding Glg Intl Small or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cardinal Small Cap  vs.  Glg Intl Small

Cardinal Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Glg Intl Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Glg Intl Small are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Glg Intl may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cardinal Small and Glg Intl

The main advantage of trading using opposite Cardinal Small and Glg Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Small position performs unexpectedly, Glg Intl 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 Glg Intl will offset losses from the drop in Glg Intl's long position.

The idea behind Cardinal Small Cap and Glg Intl Small 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.