Correlation Between POSaBIT Systems and Global Develpmts

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

By analyzing existing cross correlation between POSaBIT Systems Corp and Global Develpmts, you can compare the effects of market volatilities on POSaBIT Systems and Global Develpmts 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 POSaBIT Systems with a short position of Global Develpmts. Check out your portfolio center. Please also check ongoing floating volatility patterns of POSaBIT Systems and Global Develpmts.

Diversification Opportunities for POSaBIT Systems and Global Develpmts

0.27

Correlation Coefficient

POSaBIT Systems  Global Develpmts

Modest diversification

The 3 months correlation between POSaBIT and Global is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding POSaBIT Systems Corp and Global Develpmts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Develpmts and POSaBIT Systems 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 POSaBIT Systems Corp are associated (or correlated) with Global Develpmts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Develpmts has no effect on the direction of POSaBIT Systems i.e., POSaBIT Systems and Global Develpmts go up and down completely randomly.

Pair Corralation between POSaBIT Systems and Global Develpmts

Assuming the 90 days horizon POSaBIT Systems is expected to generate 25.95 times less return on investment than Global Develpmts. But when comparing it to its historical volatility, POSaBIT Systems Corp is 2.07 times less risky than Global Develpmts. It trades about 0.0 of its potential returns per unit of risk. Global Develpmts is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1.20  in Global Develpmts on December 29, 2024 and sell it today you would lose (0.26) from holding Global Develpmts or give up 21.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

POSaBIT Systems Corp  vs.  Global Develpmts

POSaBIT Systems Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days POSaBIT Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, POSaBIT Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Global Develpmts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Develpmts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Global Develpmts displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with POSaBIT Systems and Global Develpmts

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

The idea behind POSaBIT Systems Corp and Global Develpmts 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.