Correlation Between Globrands and Identi Healthcare

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

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

Diversification Opportunities for Globrands and Identi Healthcare

-0.5

Correlation Coefficient

Globrands  Identi Healthcare

Very good diversification

The 3 months correlation between Globrands and Identi is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Globrands Group and Identi Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identi Healthcare and Globrands 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 Globrands Group are associated (or correlated) with Identi Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identi Healthcare has no effect on the direction of Globrands i.e., Globrands and Identi Healthcare go up and down completely randomly.

Pair Corralation between Globrands and Identi Healthcare

Assuming the 90 days trading horizon Globrands Group is expected to generate 0.21 times more return on investment than Identi Healthcare. However, Globrands Group is 4.74 times less risky than Identi Healthcare. It trades about 0.27 of its potential returns per unit of risk. Identi Healthcare is currently generating about -0.14 per unit of risk. If you would invest  3,765,441  in Globrands Group on September 21, 2024 and sell it today you would earn a total of  884,559  from holding Globrands Group or generate 23.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Globrands Group  vs.  Identi Healthcare

Globrands Group

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Globrands Group are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Globrands sustained solid returns over the last few months and may actually be approaching a breakup point.

Identi Healthcare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Identi Healthcare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Identi Healthcare sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globrands and Identi Healthcare

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

The idea behind Globrands Group and Identi Healthcare 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.