Correlation Between Logintrade and Globe Trade

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

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

Diversification Opportunities for Logintrade and Globe Trade

0.21

Correlation Coefficient

Logintrade  Globe Trade

Modest diversification

The 3 months correlation between Logintrade and Globe is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Logintrade SA and Globe Trade Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Trade Centre and Logintrade 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 Logintrade SA are associated (or correlated) with Globe Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Trade Centre has no effect on the direction of Logintrade i.e., Logintrade and Globe Trade go up and down completely randomly.

Pair Corralation between Logintrade and Globe Trade

Assuming the 90 days trading horizon Logintrade SA is expected to generate 1.9 times more return on investment than Globe Trade. However, Logintrade is 1.9 times more volatile than Globe Trade Centre. It trades about 0.06 of its potential returns per unit of risk. Globe Trade Centre is currently generating about 0.0 per unit of risk. If you would invest  262.00  in Logintrade SA on September 4, 2024 and sell it today you would earn a total of  86.00  from holding Logintrade SA or generate 32.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.71%
Values	Daily Returns

Logintrade SA  vs.  Globe Trade Centre

Logintrade SA

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Logintrade SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Logintrade reported solid returns over the last few months and may actually be approaching a breakup point.

Globe Trade Centre

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 1 (%) 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.

Pair Trading with Logintrade and Globe Trade

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

The idea behind Logintrade SA and Globe Trade Centre 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.