Correlation Between Globalfoundries and Oi SA

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

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

Diversification Opportunities for Globalfoundries and Oi SA

-0.15

Correlation Coefficient

Globalfoundries  Oi SA

Good diversification

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

Pair Corralation between Globalfoundries and Oi SA

If you would invest  1.06  in Oi SA ADR on June 16, 2024 and sell it today you would earn a total of  0.00  from holding Oi SA ADR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.3%
Values	Daily Returns

Globalfoundries  vs.  Oi SA ADR

Globalfoundries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Globalfoundries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in October 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Oi SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oi SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Oi SA is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Globalfoundries and Oi SA

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

The idea behind Globalfoundries and Oi SA ADR 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.