Correlation Between SPORT LISBOA and Globex Mining

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

By analyzing existing cross correlation between SPORT LISBOA E and Globex Mining Enterprises, you can compare the effects of market volatilities on SPORT LISBOA and Globex Mining 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 SPORT LISBOA with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and Globex Mining.

Diversification Opportunities for SPORT LISBOA and Globex Mining

-0.25

Correlation Coefficient

SPORT LISBOA  Globex Mining

Very good diversification

The 3 months correlation between SPORT and Globex is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Globex Mining go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Globex Mining

Assuming the 90 days horizon SPORT LISBOA is expected to generate 3.98 times less return on investment than Globex Mining. In addition to that, SPORT LISBOA is 1.57 times more volatile than Globex Mining Enterprises. It trades about 0.08 of its total potential returns per unit of risk. Globex Mining Enterprises is currently generating about 0.47 per unit of volatility. If you would invest  76.00  in Globex Mining Enterprises on October 24, 2024 and sell it today you would earn a total of  12.00  from holding Globex Mining Enterprises or generate 15.79% return on investment over 90 days.

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

SPORT LISBOA E  vs.  Globex Mining Enterprises

SPORT LISBOA E

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SPORT LISBOA E are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SPORT LISBOA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Globex Mining Enterprises

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Globex Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SPORT LISBOA and Globex Mining

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

The idea behind SPORT LISBOA E and Globex Mining Enterprises 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.