Correlation Between Globe Trade and Noble Financials

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

Diversification Opportunities for Globe Trade and Noble Financials

-0.17

Correlation Coefficient

Globe Trade  Noble Financials

Good diversification

The 3 months correlation between Globe and Noble is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Globe Trade Centre and Noble Financials SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Financials 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 Noble Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Financials has no effect on the direction of Globe Trade i.e., Globe Trade and Noble Financials go up and down completely randomly.

Pair Corralation between Globe Trade and Noble Financials

Assuming the 90 days trading horizon Globe Trade Centre is expected to under-perform the Noble Financials. But the stock apears to be less risky and, when comparing its historical volatility, Globe Trade Centre is 2.08 times less risky than Noble Financials. The stock trades about 0.0 of its potential returns per unit of risk. The Noble Financials SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,000  in Noble Financials SA on August 27, 2024 and sell it today you would earn a total of  2,620  from holding Noble Financials SA or generate 43.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Globe Trade Centre  vs.  Noble Financials SA

Globe Trade Centre

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globe Trade Centre are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Globe Trade may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Noble Financials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Globe Trade and Noble Financials

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

The idea behind Globe Trade Centre and Noble Financials SA 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.