Correlation Between Marchex and Glory Star

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

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

Diversification Opportunities for Marchex and Glory Star

-0.06

Correlation Coefficient

Marchex  Glory Star

Good diversification

The 3 months correlation between Marchex and Glory is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Marchex and Glory Star New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glory Star New and Marchex 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 Marchex are associated (or correlated) with Glory Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glory Star New has no effect on the direction of Marchex i.e., Marchex and Glory Star go up and down completely randomly.

Pair Corralation between Marchex and Glory Star

Given the investment horizon of 90 days Marchex is expected to generate 4.47 times less return on investment than Glory Star. But when comparing it to its historical volatility, Marchex is 5.1 times less risky than Glory Star. It trades about 0.08 of its potential returns per unit of risk. Glory Star New is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.22  in Glory Star New on September 13, 2024 and sell it today you would lose (0.03) from holding Glory Star New or give up 13.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Marchex  vs.  Glory Star New

Marchex

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marchex are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, Marchex showed solid returns over the last few months and may actually be approaching a breakup point.

Glory Star New

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Glory Star New are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Glory Star showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marchex and Glory Star

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

The idea behind Marchex and Glory Star New 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.