Correlation Between AgriNurture and Globe Telecom

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

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

Diversification Opportunities for AgriNurture and Globe Telecom

0.6

Correlation Coefficient

AgriNurture  Globe Telecom

Poor diversification

The 3 months correlation between AgriNurture and Globe is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding AgriNurture and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and AgriNurture 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 AgriNurture are associated (or correlated) with Globe Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Telecom has no effect on the direction of AgriNurture i.e., AgriNurture and Globe Telecom go up and down completely randomly.

Pair Corralation between AgriNurture and Globe Telecom

Assuming the 90 days trading horizon AgriNurture is expected to generate 1.82 times more return on investment than Globe Telecom. However, AgriNurture is 1.82 times more volatile than Globe Telecom. It trades about 0.02 of its potential returns per unit of risk. Globe Telecom is currently generating about -0.05 per unit of risk. If you would invest  50.00  in AgriNurture on September 18, 2024 and sell it today you would earn a total of  0.00  from holding AgriNurture or generate 0.0% return on investment over 90 days.

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

AgriNurture  vs.  Globe Telecom

AgriNurture

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AgriNurture are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, AgriNurture is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Globe Telecom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globe Telecom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Globe Telecom is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AgriNurture and Globe Telecom

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

The idea behind AgriNurture and Globe Telecom 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.