Correlation Between Globe Trade and Centrum Finansowe

Can any of the company-specific risk be diversified away by investing in both Globe Trade and Centrum Finansowe 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 Centrum Finansowe 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 Centrum Finansowe Banku, you can compare the effects of market volatilities on Globe Trade and Centrum Finansowe 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 Centrum Finansowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globe Trade and Centrum Finansowe.

Diversification Opportunities for Globe Trade and Centrum Finansowe

0.65

Correlation Coefficient

Globe Trade  Centrum Finansowe

Poor diversification

The 3 months correlation between Globe and Centrum is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Centrum Finansowe Banku in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrum Finansowe Banku 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 Centrum Finansowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrum Finansowe Banku has no effect on the direction of Globe Trade i.e., Globe Trade and Centrum Finansowe go up and down completely randomly.

Pair Corralation between Globe Trade and Centrum Finansowe

Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the Centrum Finansowe. In addition to that, Globe Trade is 1.49 times more volatile than Centrum Finansowe Banku. It trades about 0.0 of its total potential returns per unit of risk. Centrum Finansowe Banku is currently generating about 0.09 per unit of volatility. If you would invest  418.00  in Centrum Finansowe Banku on September 2, 2024 and sell it today you would earn a total of  162.00  from holding Centrum Finansowe Banku or generate 38.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.19%
Values	Daily Returns

Globe Trade Centre  vs.  Centrum Finansowe Banku

Globe Trade Centre

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Globe Trade is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Centrum Finansowe Banku

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centrum Finansowe Banku are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Centrum Finansowe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globe Trade and Centrum Finansowe

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

The idea behind Globe Trade Centre and Centrum Finansowe Banku 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.