Correlation Between Globe Trade and Creotech Instruments

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

Diversification Opportunities for Globe Trade and Creotech Instruments

-0.33

Correlation Coefficient

Globe Trade  Creotech Instruments

Very good diversification

The 3 months correlation between Globe and Creotech is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Creotech Instruments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creotech Instruments 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 Creotech Instruments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creotech Instruments has no effect on the direction of Globe Trade i.e., Globe Trade and Creotech Instruments go up and down completely randomly.

Pair Corralation between Globe Trade and Creotech Instruments

Assuming the 90 days trading horizon Globe Trade is expected to generate 11.57 times less return on investment than Creotech Instruments. But when comparing it to its historical volatility, Globe Trade Centre is 2.03 times less risky than Creotech Instruments. It trades about 0.02 of its potential returns per unit of risk. Creotech Instruments SA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  15,200  in Creotech Instruments SA on October 9, 2024 and sell it today you would earn a total of  900.00  from holding Creotech Instruments SA or generate 5.92% return on investment over 90 days.

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

Globe Trade Centre  vs.  Creotech Instruments SA

Globe Trade Centre

Risk-Adjusted Performance

0 of 100

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.

Creotech Instruments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Creotech Instruments SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Creotech Instruments reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globe Trade and Creotech Instruments

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

The idea behind Globe Trade Centre and Creotech Instruments 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.