Correlation Between Glori Energy and TransAKT

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

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

Diversification Opportunities for Glori Energy and TransAKT

0.53

Correlation Coefficient

Glori Energy  TransAKT

Very weak diversification

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

Pair Corralation between Glori Energy and TransAKT

If you would invest  8.00  in TransAKT on September 3, 2024 and sell it today you would lose (5.23) from holding TransAKT or give up 65.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.68%
Values	Daily Returns

Glori Energy Technology  vs.  TransAKT

Glori Energy Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glori Energy Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Glori Energy is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

TransAKT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glori Energy and TransAKT

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

The idea behind Glori Energy Technology and TransAKT 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.