Correlation Between GREENX METALS and CENTRICA ADR
Can any of the company-specific risk be diversified away by investing in both GREENX METALS and CENTRICA ADR 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 GREENX METALS and CENTRICA ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GREENX METALS LTD and CENTRICA ADR NEW, you can compare the effects of market volatilities on GREENX METALS and CENTRICA ADR 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 GREENX METALS with a short position of CENTRICA ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENX METALS and CENTRICA ADR.
Diversification Opportunities for GREENX METALS and CENTRICA ADR
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GREENX and CENTRICA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding GREENX METALS LTD and CENTRICA ADR NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTRICA ADR NEW and GREENX METALS 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 GREENX METALS LTD are associated (or correlated) with CENTRICA ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTRICA ADR NEW has no effect on the direction of GREENX METALS i.e., GREENX METALS and CENTRICA ADR go up and down completely randomly.
Pair Corralation between GREENX METALS and CENTRICA ADR
Assuming the 90 days trading horizon GREENX METALS LTD is expected to generate 2.13 times more return on investment than CENTRICA ADR. However, GREENX METALS is 2.13 times more volatile than CENTRICA ADR NEW. It trades about 0.03 of its potential returns per unit of risk. CENTRICA ADR NEW is currently generating about 0.05 per unit of risk. If you would invest 39.00 in GREENX METALS LTD on September 5, 2024 and sell it today you would earn a total of 4.00 from holding GREENX METALS LTD or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GREENX METALS LTD vs. CENTRICA ADR NEW
Performance |
| Timeline |
| GREENX METALS LTD |
| CENTRICA ADR NEW |
GREENX METALS and CENTRICA ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GREENX METALS and CENTRICA ADR
The main advantage of trading using opposite GREENX METALS and CENTRICA ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GREENX METALS position performs unexpectedly, CENTRICA ADR 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 CENTRICA ADR will offset losses from the drop in CENTRICA ADR's long position.| GREENX METALS vs. CORONGLRES CDIS101 | GREENX METALS vs. AJ LUCAS GROUP | GREENX METALS vs. Superior Plus Corp | GREENX METALS vs. NMI Holdings |
| CENTRICA ADR vs. TITANIUM TRANSPORTGROUP | CENTRICA ADR vs. Hyster Yale Materials Handling | CENTRICA ADR vs. Plastic Omnium | CENTRICA ADR vs. TEXAS ROADHOUSE |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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