Correlation Between Planet Green and Central Garden
Can any of the company-specific risk be diversified away by investing in both Planet Green and Central Garden 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 Planet Green and Central Garden into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Planet Green Holdings and Central Garden Pet, you can compare the effects of market volatilities on Planet Green and Central Garden 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 Planet Green with a short position of Central Garden. Check out your portfolio center. Please also check ongoing floating volatility patterns of Planet Green and Central Garden.
Diversification Opportunities for Planet Green and Central Garden
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Planet and Central is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Planet Green Holdings and Central Garden Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Garden Pet and Planet Green 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 Planet Green Holdings are associated (or correlated) with Central Garden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Garden Pet has no effect on the direction of Planet Green i.e., Planet Green and Central Garden go up and down completely randomly.
Pair Corralation between Planet Green and Central Garden
Given the investment horizon of 90 days Planet Green Holdings is expected to generate 10.56 times more return on investment than Central Garden. However, Planet Green is 10.56 times more volatile than Central Garden Pet. It trades about 0.07 of its potential returns per unit of risk. Central Garden Pet is currently generating about 0.36 per unit of risk. If you would invest 263.00 in Planet Green Holdings on August 28, 2024 and sell it today you would lose (11.00) from holding Planet Green Holdings or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Planet Green Holdings vs. Central Garden Pet
Performance |
| Timeline |
| Planet Green Holdings |
| Central Garden Pet |
Planet Green and Central Garden Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Planet Green and Central Garden
The main advantage of trading using opposite Planet Green and Central Garden positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Planet Green position performs unexpectedly, Central Garden 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 Central Garden will offset losses from the drop in Central Garden's long position.The idea behind Planet Green Holdings and Central Garden Pet pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Central Garden vs. Seneca Foods Corp | Central Garden vs. Seneca Foods Corp | Central Garden vs. Natures Sunshine Products | Central Garden vs. J J Snack |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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