Correlation Between Globalstar and Shenandoah Telecommunicatio

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

By analyzing existing cross correlation between Globalstar and Shenandoah Telecommunications Co, you can compare the effects of market volatilities on Globalstar and Shenandoah Telecommunicatio 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 Globalstar with a short position of Shenandoah Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globalstar and Shenandoah Telecommunicatio.

Diversification Opportunities for Globalstar and Shenandoah Telecommunicatio

-0.39

Correlation Coefficient

Globalstar  Shenandoah Telecommunicatio

Very good diversification

The 3 months correlation between Globalstar and Shenandoah is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Globalstar and Shenandoah Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenandoah Telecommunicatio and Globalstar 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 Globalstar are associated (or correlated) with Shenandoah Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenandoah Telecommunicatio has no effect on the direction of Globalstar i.e., Globalstar and Shenandoah Telecommunicatio go up and down completely randomly.

Pair Corralation between Globalstar and Shenandoah Telecommunicatio

Given the investment horizon of 90 days Globalstar is expected to generate 1.61 times more return on investment than Shenandoah Telecommunicatio. However, Globalstar is 1.61 times more volatile than Shenandoah Telecommunications Co. It trades about 0.06 of its potential returns per unit of risk. Shenandoah Telecommunications Co is currently generating about -0.02 per unit of risk. If you would invest  105.00  in Globalstar on October 5, 2024 and sell it today you would earn a total of  121.50  from holding Globalstar or generate 115.71% return on investment over 90 days.

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

Globalstar  vs.  Shenandoah Telecommunications

Globalstar

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globalstar are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Globalstar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shenandoah Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenandoah Telecommunications Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Shenandoah Telecommunicatio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Globalstar and Shenandoah Telecommunicatio

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

The idea behind Globalstar and Shenandoah Telecommunications Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.