Correlation Between Element Global and Global Payment

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

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

Diversification Opportunities for Element Global and Global Payment

1.0

Correlation Coefficient

Element Global  Global Payment

No risk reduction

The 3 months correlation between Element and Global is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Element Global and Global Payment Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Payment Techn and Element 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 Element Global are associated (or correlated) with Global Payment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Payment Techn has no effect on the direction of Element Global i.e., Element Global and Global Payment go up and down completely randomly.

Pair Corralation between Element Global and Global Payment

If you would invest  0.01  in Global Payment Technologies on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Global Payment Technologies or generate 0.0% return on investment over 90 days.

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

Element Global  vs.  Global Payment Technologies

Element Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Element Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Element Global is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Global Payment Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Payment Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Global Payment is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Element Global and Global Payment

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

The idea behind Element Global and Global Payment 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..