Correlation Between Greentech Metals and OD6 Metals
Can any of the company-specific risk be diversified away by investing in both Greentech Metals and OD6 Metals 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 Greentech Metals and OD6 Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greentech Metals and OD6 Metals, you can compare the effects of market volatilities on Greentech Metals and OD6 Metals 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 Metals with a short position of OD6 Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greentech Metals and OD6 Metals.
Diversification Opportunities for Greentech Metals and OD6 Metals
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Greentech and OD6 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Greentech Metals and OD6 Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OD6 Metals and Greentech Metals 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 Metals are associated (or correlated) with OD6 Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OD6 Metals has no effect on the direction of Greentech Metals i.e., Greentech Metals and OD6 Metals go up and down completely randomly.
Pair Corralation between Greentech Metals and OD6 Metals
Assuming the 90 days trading horizon Greentech Metals is expected to under-perform the OD6 Metals. But the stock apears to be less risky and, when comparing its historical volatility, Greentech Metals is 1.35 times less risky than OD6 Metals. The stock trades about -0.06 of its potential returns per unit of risk. The OD6 Metals is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 7.00 in OD6 Metals on September 3, 2024 and sell it today you would lose (3.80) from holding OD6 Metals or give up 54.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greentech Metals vs. OD6 Metals
Performance |
| Timeline |
| Greentech Metals |
| OD6 Metals |
Greentech Metals and OD6 Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greentech Metals and OD6 Metals
The main advantage of trading using opposite Greentech Metals and OD6 Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greentech Metals position performs unexpectedly, OD6 Metals 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 OD6 Metals will offset losses from the drop in OD6 Metals' long position.| Greentech Metals vs. Northern Star Resources | Greentech Metals vs. Evolution Mining | Greentech Metals vs. Bluescope Steel | Greentech Metals vs. Aneka Tambang Tbk |
| OD6 Metals vs. Northern Star Resources | OD6 Metals vs. Evolution Mining | OD6 Metals vs. Bluescope Steel | OD6 Metals vs. Aneka Tambang Tbk |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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