Correlation Between Global Engine and Pure Cycle

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Can any of the company-specific risk be diversified away by investing in both Global Engine and Pure Cycle 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 Engine and Pure Cycle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Engine Group and Pure Cycle, you can compare the effects of market volatilities on Global Engine and Pure Cycle 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 Engine with a short position of Pure Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Engine and Pure Cycle.

Diversification Opportunities for Global Engine and Pure Cycle

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Global and Pure is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Global Engine Group and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle and Global Engine 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 Engine Group are associated (or correlated) with Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of Global Engine i.e., Global Engine and Pure Cycle go up and down completely randomly.

Pair Corralation between Global Engine and Pure Cycle

Considering the 90-day investment horizon Global Engine Group is expected to under-perform the Pure Cycle. In addition to that, Global Engine is 3.62 times more volatile than Pure Cycle. It trades about -0.14 of its total potential returns per unit of risk. Pure Cycle is currently generating about -0.19 per unit of volatility. If you would invest  1,360  in Pure Cycle on October 9, 2024 and sell it today you would lose (141.00) from holding Pure Cycle or give up 10.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Global Engine Group  vs.  Pure Cycle

 Performance 
       Timeline  
Global Engine Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global Engine Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Pure Cycle 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Pure Cycle are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Pure Cycle displayed solid returns over the last few months and may actually be approaching a breakup point.

Global Engine and Pure Cycle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Engine and Pure Cycle

The main advantage of trading using opposite Global Engine and Pure Cycle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Engine position performs unexpectedly, Pure Cycle 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 Pure Cycle will offset losses from the drop in Pure Cycle's long position.
The idea behind Global Engine Group and Pure Cycle 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.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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