Correlation Between Globex Mining and Applied Materials

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

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

Diversification Opportunities for Globex Mining and Applied Materials

-0.43

Correlation Coefficient

Globex Mining  Applied Materials

Very good diversification

The 3 months correlation between Globex and Applied is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Globex Mining i.e., Globex Mining and Applied Materials go up and down completely randomly.

Pair Corralation between Globex Mining and Applied Materials

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to under-perform the Applied Materials. But the stock apears to be less risky and, when comparing its historical volatility, Globex Mining Enterprises is 1.25 times less risky than Applied Materials. The stock trades about -0.07 of its potential returns per unit of risk. The Applied Materials is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  11,827  in Applied Materials on April 22, 2025 and sell it today you would earn a total of  4,731  from holding Applied Materials or generate 40.0% return on investment over 90 days.

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

Globex Mining Enterprises  vs.  Applied Materials

Globex Mining Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globex Mining Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Applied Materials

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Applied Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globex Mining and Applied Materials

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

The idea behind Globex Mining Enterprises and Applied Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.