Correlation Between General Environmental and Better World
Can any of the company-specific risk be diversified away by investing in both General Environmental and Better World 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 General Environmental and Better World into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Environmental Conservation and Better World Green, you can compare the effects of market volatilities on General Environmental and Better World 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 General Environmental with a short position of Better World. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Environmental and Better World.
Diversification Opportunities for General Environmental and Better World
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between General and Better is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding General Environmental Conserva and Better World Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better World Green and General 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 General Environmental Conservation are associated (or correlated) with Better World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better World Green has no effect on the direction of General Environmental i.e., General Environmental and Better World go up and down completely randomly.
Pair Corralation between General Environmental and Better World
Assuming the 90 days trading horizon General Environmental Conservation is expected to generate 0.49 times more return on investment than Better World. However, General Environmental Conservation is 2.03 times less risky than Better World. It trades about -0.12 of its potential returns per unit of risk. Better World Green is currently generating about -0.34 per unit of risk. If you would invest 43.00 in General Environmental Conservation on November 3, 2024 and sell it today you would lose (2.00) from holding General Environmental Conservation or give up 4.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Environmental Conserva vs. Better World Green
Performance |
| Timeline |
| General Environmental |
| Better World Green |
General Environmental and Better World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Environmental and Better World
The main advantage of trading using opposite General Environmental and Better World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Environmental position performs unexpectedly, Better World 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 Better World will offset losses from the drop in Better World's long position.| General Environmental vs. Better World Green | General Environmental vs. Dcon Products Public | General Environmental vs. The Erawan Group | General Environmental vs. Dynasty Ceramic Public |
| Better World vs. Beauty Community Public | Better World vs. Demco Public | Better World vs. Asia Aviation Public | Better World vs. CK Power Public |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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