Correlation Between Easy Software and GLOBUS MEDICAL-A

Can any of the company-specific risk be diversified away by investing in both Easy Software and GLOBUS MEDICAL-A 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 Easy Software and GLOBUS MEDICAL-A into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Easy Software AG and GLOBUS MEDICAL A, you can compare the effects of market volatilities on Easy Software and GLOBUS MEDICAL-A 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 Easy Software with a short position of GLOBUS MEDICAL-A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and GLOBUS MEDICAL-A.

Diversification Opportunities for Easy Software and GLOBUS MEDICAL-A

0.33

Correlation Coefficient

Easy Software  GLOBUS MEDICAL-A

Weak diversification

The 3 months correlation between Easy and GLOBUS is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and GLOBUS MEDICAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBUS MEDICAL A and Easy Software 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 Easy Software AG are associated (or correlated) with GLOBUS MEDICAL-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBUS MEDICAL A has no effect on the direction of Easy Software i.e., Easy Software and GLOBUS MEDICAL-A go up and down completely randomly.

Pair Corralation between Easy Software and GLOBUS MEDICAL-A

Assuming the 90 days trading horizon Easy Software AG is expected to generate 1.27 times more return on investment than GLOBUS MEDICAL-A. However, Easy Software is 1.27 times more volatile than GLOBUS MEDICAL A. It trades about 0.03 of its potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about 0.03 per unit of risk. If you would invest  1,437  in Easy Software AG on October 11, 2024 and sell it today you would earn a total of  353.00  from holding Easy Software AG or generate 24.57% return on investment over 90 days.

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

Easy Software AG  vs.  GLOBUS MEDICAL A

Easy Software AG

Risk-Adjusted Performance

11 of 100

Good

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

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Easy Software and GLOBUS MEDICAL-A

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

The idea behind Easy Software AG and GLOBUS MEDICAL A 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.