Correlation Between Global Payments and Mader Group

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

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

Diversification Opportunities for Global Payments and Mader Group

-0.57

Correlation Coefficient

Global Payments  Mader Group

Excellent diversification

The 3 months correlation between Global and Mader is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Global Payments and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited and Global Payments 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 Payments are associated (or correlated) with Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of Global Payments i.e., Global Payments and Mader Group go up and down completely randomly.

Pair Corralation between Global Payments and Mader Group

Considering the 90-day investment horizon Global Payments is expected to under-perform the Mader Group. In addition to that, Global Payments is 1.09 times more volatile than Mader Group Limited. It trades about -0.1 of its total potential returns per unit of risk. Mader Group Limited is currently generating about 0.14 per unit of volatility. If you would invest  355.00  in Mader Group Limited on December 28, 2024 and sell it today you would earn a total of  45.00  from holding Mader Group Limited or generate 12.68% return on investment over 90 days.

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

Global Payments  vs.  Mader Group Limited

Global Payments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Payments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Mader Group Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mader Group Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Mader Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Payments and Mader Group

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

The idea behind Global Payments and Mader Group Limited 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.