Correlation Between Green Plains and Altech Batteries
Can any of the company-specific risk be diversified away by investing in both Green Plains and Altech Batteries 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 Green Plains and Altech Batteries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Plains Renewable and Altech Batteries Limited, you can compare the effects of market volatilities on Green Plains and Altech Batteries 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 Green Plains with a short position of Altech Batteries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Plains and Altech Batteries.
Diversification Opportunities for Green Plains and Altech Batteries
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Green and Altech is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Green Plains Renewable and Altech Batteries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altech Batteries and Green Plains 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 Green Plains Renewable are associated (or correlated) with Altech Batteries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altech Batteries has no effect on the direction of Green Plains i.e., Green Plains and Altech Batteries go up and down completely randomly.
Pair Corralation between Green Plains and Altech Batteries
Given the investment horizon of 90 days Green Plains Renewable is expected to under-perform the Altech Batteries. But the stock apears to be less risky and, when comparing its historical volatility, Green Plains Renewable is 1.67 times less risky than Altech Batteries. The stock trades about -0.15 of its potential returns per unit of risk. The Altech Batteries Limited is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3.41 in Altech Batteries Limited on September 1, 2024 and sell it today you would lose (0.23) from holding Altech Batteries Limited or give up 6.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Green Plains Renewable vs. Altech Batteries Limited
Performance |
| Timeline |
| Green Plains Renewable |
| Altech Batteries |
Green Plains and Altech Batteries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Plains and Altech Batteries
The main advantage of trading using opposite Green Plains and Altech Batteries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Plains position performs unexpectedly, Altech Batteries 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 Altech Batteries will offset losses from the drop in Altech Batteries' long position.| Green Plains vs. Lsb Industries | Green Plains vs. AdvanSix | Green Plains vs. Tronox Holdings PLC | Green Plains vs. Methanex |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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