Correlation Between Global Net and SGS SA

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

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

Diversification Opportunities for Global Net and SGS SA

0.11

Correlation Coefficient

Global Net  SGS SA

Average diversification

The 3 months correlation between Global and SGS is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Global Net 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 Global Net Lease are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Global Net i.e., Global Net and SGS SA go up and down completely randomly.

Pair Corralation between Global Net and SGS SA

Assuming the 90 days trading horizon Global Net is expected to generate 70.33 times less return on investment than SGS SA. But when comparing it to its historical volatility, Global Net Lease is 1.76 times less risky than SGS SA. It trades about 0.0 of its potential returns per unit of risk. SGS SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  9,740  in SGS SA on October 11, 2024 and sell it today you would earn a total of  424.00  from holding SGS SA or generate 4.35% return on investment over 90 days.

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

Global Net Lease  vs.  SGS SA

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

SGS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SGS SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Net and SGS SA

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

The idea behind Global Net Lease and SGS SA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.