Correlation Between Financial Strategies and Globalink Investment

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

By analyzing existing cross correlation between Financial Strategies Acquisition and Globalink Investment Warrants, you can compare the effects of market volatilities on Financial Strategies and Globalink Investment 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 Financial Strategies with a short position of Globalink Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Strategies and Globalink Investment.

Diversification Opportunities for Financial Strategies and Globalink Investment

0.0

Correlation Coefficient

Financial Strategies  Globalink Investment

Pay attention - limited upside

The 3 months correlation between Financial and Globalink is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Financial Strategies Acquisiti and Globalink Investment Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalink Investment and Financial Strategies 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 Financial Strategies Acquisition are associated (or correlated) with Globalink Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalink Investment has no effect on the direction of Financial Strategies i.e., Financial Strategies and Globalink Investment go up and down completely randomly.

Pair Corralation between Financial Strategies and Globalink Investment

Assuming the 90 days horizon Financial Strategies is expected to generate 4.1 times less return on investment than Globalink Investment. But when comparing it to its historical volatility, Financial Strategies Acquisition is 4.14 times less risky than Globalink Investment. It trades about 0.16 of its potential returns per unit of risk. Globalink Investment Warrants is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.69  in Globalink Investment Warrants on October 11, 2024 and sell it today you would lose (1.36) from holding Globalink Investment Warrants or give up 80.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	27.27%
Values	Daily Returns

Financial Strategies Acquisiti  vs.  Globalink Investment Warrants

Financial Strategies

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Financial Strategies Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Financial Strategies is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Globalink Investment

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Globalink Investment Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal forward indicators, Globalink Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Financial Strategies and Globalink Investment

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

The idea behind Financial Strategies Acquisition and Globalink Investment Warrants 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.