Correlation Between Globe Trade and Biztech Konsulting

Can any of the company-specific risk be diversified away by investing in both Globe Trade and Biztech Konsulting 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 Biztech Konsulting 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 Biztech Konsulting SA, you can compare the effects of market volatilities on Globe Trade and Biztech Konsulting 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 Biztech Konsulting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and Biztech Konsulting.

Diversification Opportunities for Globe Trade and Biztech Konsulting

-0.5

Correlation Coefficient

Globe Trade  Biztech Konsulting

Very good diversification

The 3 months correlation between Globe and Biztech is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Biztech Konsulting SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biztech Konsulting 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 Biztech Konsulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biztech Konsulting has no effect on the direction of Globe Trade i.e., Globe Trade and Biztech Konsulting go up and down completely randomly.

Pair Corralation between Globe Trade and Biztech Konsulting

Assuming the 90 days trading horizon Globe Trade Centre is expected to generate 0.28 times more return on investment than Biztech Konsulting. However, Globe Trade Centre is 3.53 times less risky than Biztech Konsulting. It trades about 0.05 of its potential returns per unit of risk. Biztech Konsulting SA is currently generating about -0.03 per unit of risk. If you would invest  394.00  in Globe Trade Centre on December 23, 2024 and sell it today you would earn a total of  15.00  from holding Globe Trade Centre or generate 3.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Globe Trade Centre  vs.  Biztech Konsulting SA

Globe Trade Centre

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Globe Trade is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Biztech Konsulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biztech Konsulting SA 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.

Pair Trading with Globe Trade and Biztech Konsulting

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

The idea behind Globe Trade Centre and Biztech Konsulting 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.

Check out your portfolio center.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.