Correlation Between GreenTech Environmental and Western Metal
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By analyzing existing cross correlation between GreenTech Environmental Co and Western Metal Materials, you can compare the effects of market volatilities on GreenTech Environmental and Western Metal 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 GreenTech Environmental with a short position of Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTech Environmental and Western Metal.
Diversification Opportunities for GreenTech Environmental and Western Metal
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GreenTech and Western is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding GreenTech Environmental Co and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials and GreenTech Environmental 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 GreenTech Environmental Co are associated (or correlated) with Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of GreenTech Environmental i.e., GreenTech Environmental and Western Metal go up and down completely randomly.
Pair Corralation between GreenTech Environmental and Western Metal
Assuming the 90 days trading horizon GreenTech Environmental Co is expected to generate 1.49 times more return on investment than Western Metal. However, GreenTech Environmental is 1.49 times more volatile than Western Metal Materials. It trades about 0.15 of its potential returns per unit of risk. Western Metal Materials is currently generating about 0.04 per unit of risk. If you would invest 1,357 in GreenTech Environmental Co on August 31, 2024 and sell it today you would earn a total of 218.00 from holding GreenTech Environmental Co or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
GreenTech Environmental Co vs. Western Metal Materials
Performance |
| Timeline |
| GreenTech Environmental |
| Western Metal Materials |
GreenTech Environmental and Western Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GreenTech Environmental and Western Metal
The main advantage of trading using opposite GreenTech Environmental and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GreenTech Environmental position performs unexpectedly, Western Metal 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 Western Metal will offset losses from the drop in Western Metal's long position.The idea behind GreenTech Environmental Co and Western Metal 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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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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