Correlation Between Global Telecom and National Drilling

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

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

Diversification Opportunities for Global Telecom and National Drilling

1.0

Correlation Coefficient

Global Telecom  National Drilling

No risk reduction

The 3 months correlation between Global and National is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Telecom Holding and National Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Drilling and Global Telecom 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 Global Telecom Holding are associated (or correlated) with National Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Drilling has no effect on the direction of Global Telecom i.e., Global Telecom and National Drilling go up and down completely randomly.

Pair Corralation between Global Telecom and National Drilling

If you would invest  469.00  in National Drilling on September 27, 2024 and sell it today you would earn a total of  0.00  from holding National Drilling or generate 0.0% return on investment over 90 days.

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

Global Telecom Holding  vs.  National Drilling

Global Telecom Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Telecom Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Global Telecom is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, National Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Global Telecom and National Drilling

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

The idea behind Global Telecom Holding and National Drilling 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.