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
Modest diversification
The 3 months correlation between Global and Hour is 0.23. 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 9.03 times less risky than Hour Loop. The stock trades about -0.1 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 143.00 in Hour Loop on December 1, 2024 and sell it today you would earn a total of 40.00 from holding Hour Loop or generate 27.97% return on investment 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
Performance |
Timeline |
Global E Online |
Hour Loop |
Global E and Hour Loop Volatility Contrast
Predicted Return Density |
Returns |
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.Global E vs. MercadoLibre | Global E vs. PDD Holdings | Global E vs. JD Inc Adr | Global E vs. Alibaba Group Holding |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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