Correlation Between CSE Global and Global Develpmts

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

By analyzing existing cross correlation between CSE Global Limited and Global Develpmts, you can compare the effects of market volatilities on CSE Global and Global Develpmts 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 CSE Global with a short position of Global Develpmts. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSE Global and Global Develpmts.

Diversification Opportunities for CSE Global and Global Develpmts

-0.58

Correlation Coefficient

CSE Global  Global Develpmts

Excellent diversification

The 3 months correlation between CSE and Global is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and Global Develpmts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Develpmts and CSE Global 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 CSE Global Limited are associated (or correlated) with Global Develpmts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Develpmts has no effect on the direction of CSE Global i.e., CSE Global and Global Develpmts go up and down completely randomly.

Pair Corralation between CSE Global and Global Develpmts

Assuming the 90 days horizon CSE Global Limited is expected to generate 0.35 times more return on investment than Global Develpmts. However, CSE Global Limited is 2.88 times less risky than Global Develpmts. It trades about 0.06 of its potential returns per unit of risk. Global Develpmts is currently generating about 0.0 per unit of risk. If you would invest  35.00  in CSE Global Limited on December 27, 2024 and sell it today you would earn a total of  4.00  from holding CSE Global Limited or generate 11.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

CSE Global Limited  vs.  Global Develpmts

CSE Global Limited

Risk-Adjusted Performance

Insignificant

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

Global Develpmts

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Develpmts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Develpmts is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CSE Global and Global Develpmts

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

The idea behind CSE Global Limited and Global Develpmts 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.