Correlation Between Eastern Commercial and Globlex Holding

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

By analyzing existing cross correlation between Eastern Commercial Leasing and Globlex Holding Management, you can compare the effects of market volatilities on Eastern Commercial and Globlex Holding 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 Eastern Commercial with a short position of Globlex Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Commercial and Globlex Holding.

Diversification Opportunities for Eastern Commercial and Globlex Holding

-0.2

Correlation Coefficient

Eastern Commercial  Globlex Holding

Good diversification

The 3 months correlation between Eastern and Globlex is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Commercial Leasing and Globlex Holding Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globlex Holding Mana and Eastern Commercial 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 Eastern Commercial Leasing are associated (or correlated) with Globlex Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globlex Holding Mana has no effect on the direction of Eastern Commercial i.e., Eastern Commercial and Globlex Holding go up and down completely randomly.

Pair Corralation between Eastern Commercial and Globlex Holding

Assuming the 90 days trading horizon Eastern Commercial Leasing is expected to generate 2.08 times more return on investment than Globlex Holding. However, Eastern Commercial is 2.08 times more volatile than Globlex Holding Management. It trades about 0.07 of its potential returns per unit of risk. Globlex Holding Management is currently generating about 0.05 per unit of risk. If you would invest  95.00  in Eastern Commercial Leasing on September 17, 2024 and sell it today you would earn a total of  4.00  from holding Eastern Commercial Leasing or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Eastern Commercial Leasing  vs.  Globlex Holding Management

Eastern Commercial

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eastern Commercial Leasing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Eastern Commercial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Globlex Holding Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globlex Holding Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Eastern Commercial and Globlex Holding

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

The idea behind Eastern Commercial Leasing and Globlex Holding Management 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 Global Correlations module to find global opportunities by holding instruments from different markets.