Correlation Between CSE Global and GBT Technologies

Can any of the company-specific risk be diversified away by investing in both CSE Global and GBT Technologies 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 GBT Technologies 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 GBT Technologies, you can compare the effects of market volatilities on CSE Global and GBT Technologies 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 GBT Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSE Global and GBT Technologies.

Diversification Opportunities for CSE Global and GBT Technologies

0.19

Correlation Coefficient

CSE Global  GBT Technologies

Average diversification

The 3 months correlation between CSE and GBT is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and GBT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBT Technologies 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 GBT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBT Technologies has no effect on the direction of CSE Global i.e., CSE Global and GBT Technologies go up and down completely randomly.

Pair Corralation between CSE Global and GBT Technologies

Assuming the 90 days horizon CSE Global is expected to generate 160.69 times less return on investment than GBT Technologies. But when comparing it to its historical volatility, CSE Global Limited is 32.14 times less risky than GBT Technologies. It trades about 0.03 of its potential returns per unit of risk. GBT Technologies is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.04  in GBT Technologies on October 24, 2024 and sell it today you would lose (0.03) from holding GBT Technologies or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.59%
Values	Daily Returns

CSE Global Limited  vs.  GBT Technologies

CSE Global Limited

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSE Global Limited are ranked lower than 5 (%) 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.

GBT Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GBT Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, GBT Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSE Global and GBT Technologies

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

The idea behind CSE Global Limited and GBT Technologies 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.