Correlation Between GLOBUS MEDICAL-A and Keisei Electric

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

Diversification Opportunities for GLOBUS MEDICAL-A and Keisei Electric

0.71

Correlation Coefficient

GLOBUS MEDICAL-A  Keisei Electric

Poor diversification

The 3 months correlation between GLOBUS and Keisei is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding GLOBUS MEDICAL A and Keisei Electric Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keisei Electric Railway 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 Keisei Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keisei Electric Railway has no effect on the direction of GLOBUS MEDICAL-A i.e., GLOBUS MEDICAL-A and Keisei Electric go up and down completely randomly.

Pair Corralation between GLOBUS MEDICAL-A and Keisei Electric

Assuming the 90 days trading horizon GLOBUS MEDICAL A is expected to generate 0.87 times more return on investment than Keisei Electric. However, GLOBUS MEDICAL A is 1.16 times less risky than Keisei Electric. It trades about 0.13 of its potential returns per unit of risk. Keisei Electric Railway is currently generating about -0.06 per unit of risk. If you would invest  7,800  in GLOBUS MEDICAL A on October 11, 2024 and sell it today you would earn a total of  250.00  from holding GLOBUS MEDICAL A or generate 3.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.44%
Values	Daily Returns

GLOBUS MEDICAL A  vs.  Keisei Electric Railway

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) 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.

Keisei Electric Railway

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Keisei Electric Railway are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keisei Electric may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with GLOBUS MEDICAL-A and Keisei Electric

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

The idea behind GLOBUS MEDICAL A and Keisei Electric Railway 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.