Correlation Between Global E and Hour Loop

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

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

Diversification Opportunities for Global E and Hour Loop

0.31

Correlation Coefficient

Global E  Hour Loop

Weak diversification

The 3 months correlation between Global and Hour is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Hour Loop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hour Loop and Global E 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 E Online are associated (or correlated) with Hour Loop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hour Loop has no effect on the direction of Global E i.e., Global E and Hour Loop go up and down completely randomly.

Pair Corralation between Global E and Hour Loop

Given the investment horizon of 90 days Global E Online is expected to under-perform the Hour Loop. But the stock apears to be less risky and, when comparing its historical volatility, Global E Online is 1.86 times less risky than Hour Loop. The stock trades about -0.18 of its potential returns per unit of risk. The Hour Loop is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Hour Loop on December 27, 2024 and sell it today you would lose (95.00) from holding Hour Loop or give up 33.69% of portfolio value over 90 days.

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

Global E Online  vs.  Hour Loop

Global E Online

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global E Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Hour Loop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hour Loop has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Global E and Hour Loop

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

The idea behind Global E Online and Hour Loop 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.