Correlation Between Small Cap and Globavend Holdings

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

By analyzing existing cross correlation between Small Cap Premium and Globavend Holdings Limited, you can compare the effects of market volatilities on Small Cap and Globavend Holdings 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 Small Cap with a short position of Globavend Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Globavend Holdings.

Diversification Opportunities for Small Cap and Globavend Holdings

0.17

Correlation Coefficient

Small Cap  Globavend Holdings

Average diversification

The 3 months correlation between Small and Globavend is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium and Globavend Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globavend Holdings and Small Cap 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 Small Cap Premium are associated (or correlated) with Globavend Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globavend Holdings has no effect on the direction of Small Cap i.e., Small Cap and Globavend Holdings go up and down completely randomly.

Pair Corralation between Small Cap and Globavend Holdings

Considering the 90-day investment horizon Small Cap is expected to generate 4.83 times less return on investment than Globavend Holdings. But when comparing it to its historical volatility, Small Cap Premium is 16.67 times less risky than Globavend Holdings. It trades about 0.06 of its potential returns per unit of risk. Globavend Holdings Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Globavend Holdings Limited on December 20, 2024 and sell it today you would lose (2.00) from holding Globavend Holdings Limited or give up 3.12% of portfolio value over 90 days.

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

Small Cap Premium  vs.  Globavend Holdings Limited

Small Cap Premium

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Small Cap Premium are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Small Cap is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Globavend Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globavend Holdings Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Globavend Holdings is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Small Cap and Globavend Holdings

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

The idea behind Small Cap Premium and Globavend Holdings Limited 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.