Correlation Between System and Green Cross
Can any of the company-specific risk be diversified away by investing in both System and Green Cross 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 System and Green Cross into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System and Application and Green Cross Lab, you can compare the effects of market volatilities on System and Green Cross 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 System with a short position of Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of System and Green Cross.
Diversification Opportunities for System and Green Cross
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between System and Green is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding System and Application and Green Cross Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Lab and System 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 System and Application are associated (or correlated) with Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Lab has no effect on the direction of System i.e., System and Green Cross go up and down completely randomly.
Pair Corralation between System and Green Cross
Assuming the 90 days trading horizon System and Application is expected to generate 1.62 times more return on investment than Green Cross. However, System is 1.62 times more volatile than Green Cross Lab. It trades about 0.09 of its potential returns per unit of risk. Green Cross Lab is currently generating about -0.06 per unit of risk. If you would invest 134,830 in System and Application on November 4, 2024 and sell it today you would earn a total of 16,470 from holding System and Application or generate 12.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
System and Application vs. Green Cross Lab
Performance |
| Timeline |
| System and Application |
| Green Cross Lab |
System and Green Cross Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System and Green Cross
The main advantage of trading using opposite System and Green Cross positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System position performs unexpectedly, Green Cross 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 Green Cross will offset losses from the drop in Green Cross' long position.| System vs. Hyosung Advanced Materials | System vs. Kisan Telecom Co | System vs. Ssangyong Information Communication | System vs. TOPMATERIAL LTD |
| Green Cross vs. Dongbu Insurance Co | Green Cross vs. Playgram Co | Green Cross vs. LG Household Healthcare | Green Cross vs. Samick Musical Instruments |
Check out your portfolio center.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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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