Correlation Between GLOBUS MEDICAL-A and HEXINDO ADIPERKASA

Can any of the company-specific risk be diversified away by investing in both GLOBUS MEDICAL-A and HEXINDO ADIPERKASA 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 GLOBUS MEDICAL-A and HEXINDO ADIPERKASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLOBUS MEDICAL A and HEXINDO ADIPERKASA, you can compare the effects of market volatilities on GLOBUS MEDICAL-A and HEXINDO ADIPERKASA 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 GLOBUS MEDICAL-A with a short position of HEXINDO ADIPERKASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLOBUS MEDICAL-A and HEXINDO ADIPERKASA.

Diversification Opportunities for GLOBUS MEDICAL-A and HEXINDO ADIPERKASA

-0.51

Correlation Coefficient

GLOBUS MEDICAL-A  HEXINDO ADIPERKASA

Excellent diversification

The 3 months correlation between GLOBUS and HEXINDO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and HEXINDO ADIPERKASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXINDO ADIPERKASA and GLOBUS MEDICAL-A 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 GLOBUS MEDICAL A are associated (or correlated) with HEXINDO ADIPERKASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXINDO ADIPERKASA has no effect on the direction of GLOBUS MEDICAL-A i.e., GLOBUS MEDICAL-A and HEXINDO ADIPERKASA go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL-A and HEXINDO ADIPERKASA

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.58 times more return on investment than HEXINDO ADIPERKASA. However, GLOBUS MEDICAL A is 1.72 times less risky than HEXINDO ADIPERKASA. It trades about 0.03 of its potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about 0.01 per unit of risk. If you would invest  6,650  in GLOBUS MEDICAL A on October 10, 2024 and sell it today you would earn a total of  1,350  from holding GLOBUS MEDICAL A or generate 20.3% return on investment over 90 days.

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

GLOBUS MEDICAL A  vs.  HEXINDO ADIPERKASA

GLOBUS MEDICAL A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

HEXINDO ADIPERKASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with GLOBUS MEDICAL-A and HEXINDO ADIPERKASA

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

The idea behind GLOBUS MEDICAL A and HEXINDO ADIPERKASA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.