Correlation Between Associated British and Planet Green
Can any of the company-specific risk be diversified away by investing in both Associated British and Planet Green 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 Associated British and Planet Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Planet Green Holdings, you can compare the effects of market volatilities on Associated British and Planet Green 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 Associated British with a short position of Planet Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Planet Green.
Diversification Opportunities for Associated British and Planet Green
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Associated and Planet is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Planet Green Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Green Holdings and Associated British 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 Associated British Foods are associated (or correlated) with Planet Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Green Holdings has no effect on the direction of Associated British i.e., Associated British and Planet Green go up and down completely randomly.
Pair Corralation between Associated British and Planet Green
Assuming the 90 days horizon Associated British Foods is expected to under-perform the Planet Green. But the pink sheet apears to be less risky and, when comparing its historical volatility, Associated British Foods is 12.32 times less risky than Planet Green. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Planet Green Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 263.00 in Planet Green Holdings on August 28, 2024 and sell it today you would lose (11.00) from holding Planet Green Holdings or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. Planet Green Holdings
Performance |
| Timeline |
| Associated British Foods |
| Planet Green Holdings |
Associated British and Planet Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Planet Green
The main advantage of trading using opposite Associated British and Planet Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Planet Green 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 Planet Green will offset losses from the drop in Planet Green's long position.| Associated British vs. Darling Ingredients | Associated British vs. JM Smucker | Associated British vs. McCormick Company Incorporated | Associated British vs. Campbell Soup |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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