Correlation Between Monnari Trade and Globe Trade

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

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

Diversification Opportunities for Monnari Trade and Globe Trade

0.72

Correlation Coefficient

Monnari Trade  Globe Trade

Poor diversification

The 3 months correlation between Monnari and Globe is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Monnari Trade 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 Monnari 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 Monnari Trade 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 Monnari Trade i.e., Monnari Trade and Globe Trade go up and down completely randomly.

Pair Corralation between Monnari Trade and Globe Trade

Assuming the 90 days trading horizon Monnari Trade SA is expected to generate 0.7 times more return on investment than Globe Trade. However, Monnari Trade SA is 1.43 times less risky than Globe Trade. It trades about 0.01 of its potential returns per unit of risk. Globe Trade Centre is currently generating about -0.01 per unit of risk. If you would invest  485.00  in Monnari Trade SA on October 12, 2024 and sell it today you would earn a total of  9.00  from holding Monnari Trade SA or generate 1.86% return on investment over 90 days.

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

Monnari Trade SA  vs.  Globe Trade Centre

Monnari Trade SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monnari Trade SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Monnari Trade and Globe Trade

The main advantage of trading using opposite Monnari Trade and Globe Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monnari Trade 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 Monnari Trade 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.