Correlation Between Glori Energy and USCorp

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

Diversification Opportunities for Glori Energy and USCorp

0.41

Correlation Coefficient

Glori Energy  USCorp

Very weak diversification

The 3 months correlation between Glori and USCorp is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Glori Energy Technology and USCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USCorp 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 USCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USCorp has no effect on the direction of Glori Energy i.e., Glori Energy and USCorp go up and down completely randomly.

Pair Corralation between Glori Energy and USCorp

If you would invest  0.01  in USCorp on October 7, 2024 and sell it today you would earn a total of  0.01  from holding USCorp or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	2.44%
Values	Daily Returns

Glori Energy Technology  vs.  USCorp

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.

USCorp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in USCorp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, USCorp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Glori Energy and USCorp

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

The idea behind Glori Energy Technology and USCorp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.