Correlation Between Globe Trade and Allegroeu

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

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

Diversification Opportunities for Globe Trade and Allegroeu

-0.54

Correlation Coefficient

Globe Trade  Allegroeu

Excellent diversification

The 3 months correlation between Globe and Allegroeu is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Allegroeu SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegroeu SA and Globe Trade 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 Globe Trade Centre are associated (or correlated) with Allegroeu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegroeu SA has no effect on the direction of Globe Trade i.e., Globe Trade and Allegroeu go up and down completely randomly.

Pair Corralation between Globe Trade and Allegroeu

Assuming the 90 days trading horizon Globe Trade Centre is expected to generate 0.53 times more return on investment than Allegroeu. However, Globe Trade Centre is 1.89 times less risky than Allegroeu. It trades about -0.01 of its potential returns per unit of risk. Allegroeu SA is currently generating about -0.35 per unit of risk. If you would invest  435.00  in Globe Trade Centre on August 31, 2024 and sell it today you would lose (2.00) from holding Globe Trade Centre or give up 0.46% of portfolio value over 90 days.

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

Globe Trade Centre  vs.  Allegroeu SA

Globe Trade Centre

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Globe Trade may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Allegroeu SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allegroeu SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Globe Trade and Allegroeu

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

The idea behind Globe Trade Centre and Allegroeu SA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.