Correlation Between Green Star and Neo Performance
Can any of the company-specific risk be diversified away by investing in both Green Star and Neo Performance 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 Star and Neo Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Star Products and Neo Performance Materials, you can compare the effects of market volatilities on Green Star and Neo Performance 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 Star with a short position of Neo Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Star and Neo Performance.
Diversification Opportunities for Green Star and Neo Performance
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Green and Neo is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Green Star Products and Neo Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Performance Materials and Green Star 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 Star Products are associated (or correlated) with Neo Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Performance Materials has no effect on the direction of Green Star i.e., Green Star and Neo Performance go up and down completely randomly.
Pair Corralation between Green Star and Neo Performance
Given the investment horizon of 90 days Green Star Products is expected to generate 11.64 times more return on investment than Neo Performance. However, Green Star is 11.64 times more volatile than Neo Performance Materials. It trades about 0.08 of its potential returns per unit of risk. Neo Performance Materials is currently generating about 0.01 per unit of risk. If you would invest 0.10 in Green Star Products on August 30, 2024 and sell it today you would earn a total of 0.01 from holding Green Star Products or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Green Star Products vs. Neo Performance Materials
Performance |
| Timeline |
| Green Star Products |
| Neo Performance Materials |
Green Star and Neo Performance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Star and Neo Performance
The main advantage of trading using opposite Green Star and Neo Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Star position performs unexpectedly, Neo Performance 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 Neo Performance will offset losses from the drop in Neo Performance's long position.| Green Star vs. Akzo Nobel NV | Green Star vs. Avoca LLC | Green Star vs. Arkema SA ADR | Green Star vs. HUMANA INC |
| Neo Performance vs. Akzo Nobel NV | Neo Performance vs. Avoca LLC | Neo Performance vs. Arkema SA ADR | Neo Performance vs. HUMANA INC |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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