Correlation Between GlobalData PLC and Magnora ASA

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

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

Diversification Opportunities for GlobalData PLC and Magnora ASA

-0.18

Correlation Coefficient

GlobalData PLC  Magnora ASA

Good diversification

The 3 months correlation between GlobalData and Magnora is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding GlobalData PLC and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA and GlobalData PLC 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 GlobalData PLC are associated (or correlated) with Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of GlobalData PLC i.e., GlobalData PLC and Magnora ASA go up and down completely randomly.

Pair Corralation between GlobalData PLC and Magnora ASA

Assuming the 90 days trading horizon GlobalData PLC is expected to generate 1.38 times more return on investment than Magnora ASA. However, GlobalData PLC is 1.38 times more volatile than Magnora ASA. It trades about -0.05 of its potential returns per unit of risk. Magnora ASA is currently generating about -0.13 per unit of risk. If you would invest  18,550  in GlobalData PLC on October 25, 2024 and sell it today you would lose (500.00) from holding GlobalData PLC or give up 2.7% of portfolio value over 90 days.

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

GlobalData PLC  vs.  Magnora ASA

GlobalData PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Magnora ASA

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Magnora ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Magnora ASA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GlobalData PLC and Magnora ASA

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

The idea behind GlobalData PLC and Magnora ASA 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.