Correlation Between CEZ As and Globe Trade

Can any of the company-specific risk be diversified away by investing in both CEZ As 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 CEZ As and Globe Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CEZ as and Globe Trade Centre, you can compare the effects of market volatilities on CEZ As 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 CEZ As with a short position of Globe Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEZ As and Globe Trade.

Diversification Opportunities for CEZ As and Globe Trade

-0.44

Correlation Coefficient

CEZ As  Globe Trade

Very good diversification

The 3 months correlation between CEZ and Globe is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding CEZ as 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 CEZ As 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 CEZ as 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 CEZ As i.e., CEZ As and Globe Trade go up and down completely randomly.

Pair Corralation between CEZ As and Globe Trade

Assuming the 90 days trading horizon CEZ as is expected to generate 0.91 times more return on investment than Globe Trade. However, CEZ as is 1.1 times less risky than Globe Trade. It trades about 0.15 of its potential returns per unit of risk. Globe Trade Centre is currently generating about -0.07 per unit of risk. If you would invest  14,510  in CEZ as on October 9, 2024 and sell it today you would earn a total of  2,490  from holding CEZ as or generate 17.16% return on investment over 90 days.

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

CEZ as  vs.  Globe Trade Centre

CEZ as

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ as are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, CEZ As reported solid returns over the last few months and may actually be approaching a breakup point.

Globe Trade Centre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Trade Centre has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with CEZ As and Globe Trade

The main advantage of trading using opposite CEZ As and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEZ As 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 CEZ as 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.

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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.