Correlation Between Continental Beverage and Green Planet
Can any of the company-specific risk be diversified away by investing in both Continental Beverage and Green Planet 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 Continental Beverage and Green Planet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Continental Beverage Brands and Green Planet Bio, you can compare the effects of market volatilities on Continental Beverage and Green Planet 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 Continental Beverage with a short position of Green Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Continental Beverage and Green Planet.
Diversification Opportunities for Continental Beverage and Green Planet
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Continental and Green is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Continental Beverage Brands and Green Planet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Planet Bio and Continental Beverage 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 Continental Beverage Brands are associated (or correlated) with Green Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Planet Bio has no effect on the direction of Continental Beverage i.e., Continental Beverage and Green Planet go up and down completely randomly.
Pair Corralation between Continental Beverage and Green Planet
Given the investment horizon of 90 days Continental Beverage Brands is expected to generate 1.67 times more return on investment than Green Planet. However, Continental Beverage is 1.67 times more volatile than Green Planet Bio. It trades about 0.16 of its potential returns per unit of risk. Green Planet Bio is currently generating about 0.11 per unit of risk. If you would invest 12.00 in Continental Beverage Brands on September 2, 2024 and sell it today you would earn a total of 63.00 from holding Continental Beverage Brands or generate 525.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Continental Beverage Brands vs. Green Planet Bio
Performance |
| Timeline |
| Continental Beverage |
| Green Planet Bio |
Continental Beverage and Green Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Continental Beverage and Green Planet
The main advantage of trading using opposite Continental Beverage and Green Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Continental Beverage position performs unexpectedly, Green Planet 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 Planet will offset losses from the drop in Green Planet's long position.| Continental Beverage vs. American Leisure Holdings | Continental Beverage vs. Supurva Healthcare Group | Continental Beverage vs. China Health Management | Continental Beverage vs. Embrace Change Acquisition |
| Green Planet vs. Sealed Air | Green Planet vs. Hudson Technologies | Green Planet vs. Luxfer Holdings PLC | Green Planet vs. Hawkins |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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