Correlation Between Green Cross and FOODWELL

Can any of the company-specific risk be diversified away by investing in both Green Cross and FOODWELL 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 Cross and FOODWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Green Cross Medical and FOODWELL Co, you can compare the effects of market volatilities on Green Cross and FOODWELL 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 Cross with a short position of FOODWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and FOODWELL.

Diversification Opportunities for Green Cross and FOODWELL

0.24

Correlation Coefficient

Green Cross  FOODWELL

Modest diversification

The 3 months correlation between Green and FOODWELL is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical and FOODWELL Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FOODWELL and Green Cross 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 Cross Medical are associated (or correlated) with FOODWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FOODWELL has no effect on the direction of Green Cross i.e., Green Cross and FOODWELL go up and down completely randomly.

Pair Corralation between Green Cross and FOODWELL

Assuming the 90 days trading horizon Green Cross Medical is expected to under-perform the FOODWELL. In addition to that, Green Cross is 1.44 times more volatile than FOODWELL Co. It trades about -0.09 of its total potential returns per unit of risk. FOODWELL Co is currently generating about 0.09 per unit of volatility. If you would invest  480,000  in FOODWELL Co on September 14, 2024 and sell it today you would earn a total of  42,000  from holding FOODWELL Co or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Green Cross Medical  vs.  FOODWELL Co

Green Cross Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Cross Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FOODWELL

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FOODWELL Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, FOODWELL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Green Cross and FOODWELL

The main advantage of trading using opposite Green Cross and FOODWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, FOODWELL 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 FOODWELL will offset losses from the drop in FOODWELL's long position.

The idea behind Green Cross Medical and FOODWELL Co 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.