Correlation Between Wisekey International and Globalink Investment

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

By analyzing existing cross correlation between Wisekey International Holding and Globalink Investment Rights, you can compare the effects of market volatilities on Wisekey International and Globalink Investment 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 Wisekey International with a short position of Globalink Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wisekey International and Globalink Investment.

Diversification Opportunities for Wisekey International and Globalink Investment

0.15

Correlation Coefficient

Wisekey International  Globalink Investment

Average diversification

The 3 months correlation between Wisekey and Globalink is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and Globalink Investment Rights in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalink Investment and Wisekey International 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 Wisekey International Holding are associated (or correlated) with Globalink Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalink Investment has no effect on the direction of Wisekey International i.e., Wisekey International and Globalink Investment go up and down completely randomly.

Pair Corralation between Wisekey International and Globalink Investment

Given the investment horizon of 90 days Wisekey International is expected to generate 2.6 times less return on investment than Globalink Investment. But when comparing it to its historical volatility, Wisekey International Holding is 3.48 times less risky than Globalink Investment. It trades about 0.06 of its potential returns per unit of risk. Globalink Investment Rights is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Globalink Investment Rights on September 13, 2024 and sell it today you would lose (1.00) from holding Globalink Investment Rights or give up 6.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	26.98%
Values	Daily Returns

Wisekey International Holding  vs.  Globalink Investment Rights

Wisekey International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

Globalink Investment

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Globalink Investment Rights has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively inconsistent forward indicators, Globalink Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wisekey International and Globalink Investment

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

The idea behind Wisekey International Holding and Globalink Investment Rights 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.