Correlation Between Globe Telecom and Atlas Consolidated

Can any of the company-specific risk be diversified away by investing in both Globe Telecom and Atlas Consolidated 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 Globe Telecom and Atlas Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Globe Telecom and Atlas Consolidated Mining, you can compare the effects of market volatilities on Globe Telecom and Atlas Consolidated 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 Globe Telecom with a short position of Atlas Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Telecom and Atlas Consolidated.

Diversification Opportunities for Globe Telecom and Atlas Consolidated

0.54

Correlation Coefficient

Globe Telecom  Atlas Consolidated

Very weak diversification

The 3 months correlation between Globe and Atlas is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Globe Telecom and Atlas Consolidated Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Consolidated Mining and Globe Telecom 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 Globe Telecom are associated (or correlated) with Atlas Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Consolidated Mining has no effect on the direction of Globe Telecom i.e., Globe Telecom and Atlas Consolidated go up and down completely randomly.

Pair Corralation between Globe Telecom and Atlas Consolidated

Assuming the 90 days trading horizon Globe Telecom is expected to generate 0.63 times more return on investment than Atlas Consolidated. However, Globe Telecom is 1.58 times less risky than Atlas Consolidated. It trades about 0.32 of its potential returns per unit of risk. Atlas Consolidated Mining is currently generating about -0.06 per unit of risk. If you would invest  208,000  in Globe Telecom on October 13, 2024 and sell it today you would earn a total of  22,000  from holding Globe Telecom or generate 10.58% return on investment over 90 days.

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

Globe Telecom  vs.  Atlas Consolidated Mining

Globe Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Globe Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Atlas Consolidated Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlas Consolidated Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Globe Telecom and Atlas Consolidated

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

The idea behind Globe Telecom and Atlas Consolidated Mining 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.