Correlation Between Ecotel Communication and Globex Mining

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

By analyzing existing cross correlation between ecotel communication ag and Globex Mining Enterprises, you can compare the effects of market volatilities on Ecotel Communication and Globex Mining 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 Ecotel Communication with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecotel Communication and Globex Mining.

Diversification Opportunities for Ecotel Communication and Globex Mining

0.56

Correlation Coefficient

Ecotel Communication  Globex Mining

Very weak diversification

The 3 months correlation between Ecotel and Globex is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ecotel communication ag and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and Ecotel Communication 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 ecotel communication ag are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Ecotel Communication i.e., Ecotel Communication and Globex Mining go up and down completely randomly.

Pair Corralation between Ecotel Communication and Globex Mining

Assuming the 90 days trading horizon ecotel communication ag is expected to under-perform the Globex Mining. In addition to that, Ecotel Communication is 1.46 times more volatile than Globex Mining Enterprises. It trades about -0.02 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.04 per unit of volatility. If you would invest  61.00  in Globex Mining Enterprises on October 11, 2024 and sell it today you would earn a total of  22.00  from holding Globex Mining Enterprises or generate 36.07% return on investment over 90 days.

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

ecotel communication ag  vs.  Globex Mining Enterprises

ecotel communication

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ecotel communication ag are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Ecotel Communication may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Globex Mining Enterprises

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ecotel Communication and Globex Mining

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

The idea behind ecotel communication ag and Globex Mining Enterprises 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.