Correlation Between GreenTech Environmental and Porton Fine

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

By analyzing existing cross correlation between GreenTech Environmental Co and Porton Fine Chemicals, you can compare the effects of market volatilities on GreenTech Environmental and Porton Fine 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 Environmental with a short position of Porton Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenTech Environmental and Porton Fine.

Diversification Opportunities for GreenTech Environmental and Porton Fine

0.44

Correlation Coefficient

GreenTech Environmental  Porton Fine

Very weak diversification

The 3 months correlation between GreenTech and Porton is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding GreenTech Environmental Co and Porton Fine Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Porton Fine Chemicals and GreenTech Environmental 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 Environmental Co are associated (or correlated) with Porton Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Porton Fine Chemicals has no effect on the direction of GreenTech Environmental i.e., GreenTech Environmental and Porton Fine go up and down completely randomly.

Pair Corralation between GreenTech Environmental and Porton Fine

Assuming the 90 days trading horizon GreenTech Environmental Co is expected to generate 0.84 times more return on investment than Porton Fine. However, GreenTech Environmental Co is 1.19 times less risky than Porton Fine. It trades about 0.06 of its potential returns per unit of risk. Porton Fine Chemicals is currently generating about 0.02 per unit of risk. If you would invest  1,218  in GreenTech Environmental Co on October 11, 2024 and sell it today you would earn a total of  121.00  from holding GreenTech Environmental Co or generate 9.93% return on investment over 90 days.

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

GreenTech Environmental Co  vs.  Porton Fine Chemicals

GreenTech Environmental

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTech Environmental Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, GreenTech Environmental sustained solid returns over the last few months and may actually be approaching a breakup point.

Porton Fine Chemicals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Porton Fine Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Porton Fine is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with GreenTech Environmental and Porton Fine

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

The idea behind GreenTech Environmental Co and Porton Fine Chemicals 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.