Correlation Between Globant SA and Cantaloupe

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

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

Diversification Opportunities for Globant SA and Cantaloupe

0.82

Correlation Coefficient

Globant SA  Cantaloupe

Very poor diversification

The 3 months correlation between Globant and Cantaloupe is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Globant SA and Cantaloupe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cantaloupe and Globant SA 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 Globant SA are associated (or correlated) with Cantaloupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cantaloupe has no effect on the direction of Globant SA i.e., Globant SA and Cantaloupe go up and down completely randomly.

Pair Corralation between Globant SA and Cantaloupe

Given the investment horizon of 90 days Globant SA is expected to generate 1.96 times less return on investment than Cantaloupe. But when comparing it to its historical volatility, Globant SA is 1.01 times less risky than Cantaloupe. It trades about 0.11 of its potential returns per unit of risk. Cantaloupe is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  647.00  in Cantaloupe on August 31, 2024 and sell it today you would earn a total of  258.00  from holding Cantaloupe or generate 39.88% return on investment over 90 days.

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

Globant SA  vs.  Cantaloupe

Globant SA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Cantaloupe

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cantaloupe are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady essential indicators, Cantaloupe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globant SA and Cantaloupe

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

The idea behind Globant SA and Cantaloupe 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.