Correlation Between Axelum Resources and Globe Telecom

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

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

Diversification Opportunities for Axelum Resources and Globe Telecom

0.65

Correlation Coefficient

Axelum Resources  Globe Telecom

Poor diversification

The 3 months correlation between Axelum and Globe is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Axelum Resources Corp and Globe Telecom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Telecom and Axelum Resources 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 Axelum Resources Corp 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 Axelum Resources i.e., Axelum Resources and Globe Telecom go up and down completely randomly.

Pair Corralation between Axelum Resources and Globe Telecom

Assuming the 90 days trading horizon Axelum Resources Corp is expected to under-perform the Globe Telecom. In addition to that, Axelum Resources is 1.6 times more volatile than Globe Telecom. It trades about -0.03 of its total potential returns per unit of risk. Globe Telecom is currently generating about -0.05 per unit of volatility. If you would invest  223,352  in Globe Telecom on September 24, 2024 and sell it today you would lose (15,352) from holding Globe Telecom or give up 6.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.19%
Values	Daily Returns

Axelum Resources Corp  vs.  Globe Telecom

Axelum Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axelum Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Axelum Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Axelum Resources and Globe Telecom

The main advantage of trading using opposite Axelum Resources and Globe Telecom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axelum Resources 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 Axelum Resources Corp 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.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.