Correlation Between Global Engine and ProtoSource

Can any of the company-specific risk be diversified away by investing in both Global Engine and ProtoSource 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 ProtoSource 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 ProtoSource, you can compare the effects of market volatilities on Global Engine and ProtoSource 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 ProtoSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Engine and ProtoSource.

Diversification Opportunities for Global Engine and ProtoSource

-0.53

Correlation Coefficient

Global Engine  ProtoSource

Excellent diversification

The 3 months correlation between Global and ProtoSource is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Global Engine Group and ProtoSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProtoSource 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 ProtoSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProtoSource has no effect on the direction of Global Engine i.e., Global Engine and ProtoSource go up and down completely randomly.

Pair Corralation between Global Engine and ProtoSource

If you would invest  0.92  in ProtoSource on September 15, 2024 and sell it today you would earn a total of  0.00  from holding ProtoSource or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.67%
Values	Daily Returns

Global Engine Group  vs.  ProtoSource

Global Engine Group

Risk-Adjusted Performance

0 of 100

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 unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ProtoSource

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProtoSource has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, ProtoSource is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Global Engine and ProtoSource

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

The idea behind Global Engine Group and ProtoSource 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.