Correlation Between Global Business and HeartCore Enterprises

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

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

Diversification Opportunities for Global Business and HeartCore Enterprises

0.05

Correlation Coefficient

Global Business  HeartCore Enterprises

Significant diversification

The 3 months correlation between Global and HeartCore is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Global Business Travel and HeartCore Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeartCore Enterprises and Global Business 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 Global Business Travel are associated (or correlated) with HeartCore Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeartCore Enterprises has no effect on the direction of Global Business i.e., Global Business and HeartCore Enterprises go up and down completely randomly.

Pair Corralation between Global Business and HeartCore Enterprises

Given the investment horizon of 90 days Global Business Travel is expected to generate 0.25 times more return on investment than HeartCore Enterprises. However, Global Business Travel is 4.06 times less risky than HeartCore Enterprises. It trades about -0.1 of its potential returns per unit of risk. HeartCore Enterprises is currently generating about -0.03 per unit of risk. If you would invest  882.00  in Global Business Travel on November 28, 2024 and sell it today you would lose (22.00) from holding Global Business Travel or give up 2.49% of portfolio value over 90 days.

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

Global Business Travel  vs.  HeartCore Enterprises

Global Business Travel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Business Travel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HeartCore Enterprises

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Global Business and HeartCore Enterprises

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

The idea behind Global Business Travel and HeartCore Enterprises 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.