Correlation Between Globex Mining and COMPUTERSHARE

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

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

Diversification Opportunities for Globex Mining and COMPUTERSHARE

0.74

Correlation Coefficient

Globex Mining  COMPUTERSHARE

Poor diversification

The 3 months correlation between Globex and COMPUTERSHARE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and COMPUTERSHARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTERSHARE and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with COMPUTERSHARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTERSHARE has no effect on the direction of Globex Mining i.e., Globex Mining and COMPUTERSHARE go up and down completely randomly.

Pair Corralation between Globex Mining and COMPUTERSHARE

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to generate 0.43 times more return on investment than COMPUTERSHARE. However, Globex Mining Enterprises is 2.35 times less risky than COMPUTERSHARE. It trades about 0.63 of its potential returns per unit of risk. COMPUTERSHARE is currently generating about 0.16 per unit of risk. If you would invest  74.00  in Globex Mining Enterprises on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Globex Mining Enterprises or generate 6.76% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  COMPUTERSHARE

Globex Mining Enterprises

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

COMPUTERSHARE

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in COMPUTERSHARE are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical indicators, COMPUTERSHARE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globex Mining and COMPUTERSHARE

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

The idea behind Globex Mining Enterprises and COMPUTERSHARE 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..