Correlation Between Globe Trade and Allegroeu

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

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

Diversification Opportunities for Globe Trade and Allegroeu

0.48

Correlation Coefficient

Globe Trade  Allegroeu

Very weak diversification

The 3 months correlation between Globe and Allegroeu is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA and Globe Trade 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 Globe Trade Centre are associated (or correlated) with Allegroeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegroeu SA has no effect on the direction of Globe Trade i.e., Globe Trade and Allegroeu go up and down completely randomly.

Pair Corralation between Globe Trade and Allegroeu

Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the Allegroeu. But the stock apears to be less risky and, when comparing its historical volatility, Globe Trade Centre is 1.24 times less risky than Allegroeu. The stock trades about -0.11 of its potential returns per unit of risk. The Allegroeu SA is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,825  in Allegroeu SA on November 20, 2024 and sell it today you would earn a total of  268.00  from holding Allegroeu SA or generate 9.49% return on investment over 90 days.

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

Globe Trade Centre  vs.  Allegroeu SA

Globe Trade Centre

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globe Trade Centre has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Allegroeu SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Allegroeu SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Allegroeu may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Globe Trade and Allegroeu

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

The idea behind Globe Trade Centre and Allegroeu 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.