Correlation Between Globe Trade and ODFJELL DRILLLTD

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

By analyzing existing cross correlation between Globe Trade Centre and ODFJELL DRILLLTD DL 01, you can compare the effects of market volatilities on Globe Trade and ODFJELL DRILLLTD 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 Globe Trade with a short position of ODFJELL DRILLLTD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and ODFJELL DRILLLTD.

Diversification Opportunities for Globe Trade and ODFJELL DRILLLTD

-0.1

Correlation Coefficient

Globe Trade  ODFJELL DRILLLTD

Good diversification

The 3 months correlation between Globe and ODFJELL is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and ODFJELL DRILLLTD DL 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODFJELL DRILLLTD and Globe Trade 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 Globe Trade Centre are associated (or correlated) with ODFJELL DRILLLTD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODFJELL DRILLLTD has no effect on the direction of Globe Trade i.e., Globe Trade and ODFJELL DRILLLTD go up and down completely randomly.

Pair Corralation between Globe Trade and ODFJELL DRILLLTD

Assuming the 90 days trading horizon Globe Trade is expected to generate 3.13 times less return on investment than ODFJELL DRILLLTD. But when comparing it to its historical volatility, Globe Trade Centre is 2.53 times less risky than ODFJELL DRILLLTD. It trades about 0.15 of its potential returns per unit of risk. ODFJELL DRILLLTD DL 01 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  412.00  in ODFJELL DRILLLTD DL 01 on December 29, 2024 and sell it today you would earn a total of  104.00  from holding ODFJELL DRILLLTD DL 01 or generate 25.24% return on investment over 90 days.

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

Globe Trade Centre  vs.  ODFJELL DRILLLTD DL 01

Globe Trade Centre

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Globe Trade may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ODFJELL DRILLLTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ODFJELL DRILLLTD DL 01 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ODFJELL DRILLLTD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globe Trade and ODFJELL DRILLLTD

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

The idea behind Globe Trade Centre and ODFJELL DRILLLTD DL 01 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.