Correlation Between Cloudflare and Glimpse

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

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

Diversification Opportunities for Cloudflare and Glimpse

-0.66

Correlation Coefficient

Cloudflare  Glimpse

Excellent diversification

The 3 months correlation between Cloudflare and Glimpse is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Cloudflare and Glimpse Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glimpse Group and Cloudflare 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 Cloudflare are associated (or correlated) with Glimpse. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glimpse Group has no effect on the direction of Cloudflare i.e., Cloudflare and Glimpse go up and down completely randomly.

Pair Corralation between Cloudflare and Glimpse

Considering the 90-day investment horizon Cloudflare is expected to generate 0.46 times more return on investment than Glimpse. However, Cloudflare is 2.18 times less risky than Glimpse. It trades about 0.16 of its potential returns per unit of risk. Glimpse Group is currently generating about -0.04 per unit of risk. If you would invest  7,811  in Cloudflare on September 1, 2024 and sell it today you would earn a total of  2,172  from holding Cloudflare or generate 27.81% return on investment over 90 days.

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

Cloudflare  vs.  Glimpse Group

Cloudflare

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cloudflare are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Cloudflare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Glimpse Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Glimpse Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cloudflare and Glimpse

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

The idea behind Cloudflare and Glimpse Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.