Correlation Between Greentech Metals and SportsHero
Can any of the company-specific risk be diversified away by investing in both Greentech Metals and SportsHero 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 SportsHero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Greentech Metals and SportsHero, you can compare the effects of market volatilities on Greentech Metals and SportsHero 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 SportsHero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greentech Metals and SportsHero.
Diversification Opportunities for Greentech Metals and SportsHero
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Greentech and SportsHero is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Greentech Metals and SportsHero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SportsHero 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 SportsHero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SportsHero has no effect on the direction of Greentech Metals i.e., Greentech Metals and SportsHero go up and down completely randomly.
Pair Corralation between Greentech Metals and SportsHero
Assuming the 90 days trading horizon Greentech Metals is expected to under-perform the SportsHero. But the stock apears to be less risky and, when comparing its historical volatility, Greentech Metals is 2.12 times less risky than SportsHero. The stock trades about -0.06 of its potential returns per unit of risk. The SportsHero is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.50 in SportsHero on September 3, 2024 and sell it today you would earn a total of 1.50 from holding SportsHero or generate 300.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Greentech Metals vs. SportsHero
Performance |
| Timeline |
| Greentech Metals |
| SportsHero |
Greentech Metals and SportsHero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Greentech Metals and SportsHero
The main advantage of trading using opposite Greentech Metals and SportsHero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Greentech Metals position performs unexpectedly, SportsHero 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 SportsHero will offset losses from the drop in SportsHero's long position.| Greentech Metals vs. Northern Star Resources | Greentech Metals vs. Evolution Mining | Greentech Metals vs. Bluescope Steel | Greentech Metals vs. Aneka Tambang Tbk |
| SportsHero vs. Encounter Resources | SportsHero vs. Tlou Energy | SportsHero vs. Superior Resources | SportsHero vs. Peel Mining |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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