Correlation Between Aristocrat Leisure and GreenX Metals

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

By analyzing existing cross correlation between Aristocrat Leisure and GreenX Metals, you can compare the effects of market volatilities on Aristocrat Leisure and GreenX Metals 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 Aristocrat Leisure with a short position of GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and GreenX Metals.

Diversification Opportunities for Aristocrat Leisure and GreenX Metals

-0.59

Correlation Coefficient

Aristocrat Leisure  GreenX Metals

Excellent diversification

The 3 months correlation between Aristocrat and GreenX is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals and Aristocrat Leisure 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 Aristocrat Leisure are associated (or correlated) with GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and GreenX Metals go up and down completely randomly.

Pair Corralation between Aristocrat Leisure and GreenX Metals

Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.42 times more return on investment than GreenX Metals. However, Aristocrat Leisure is 2.38 times less risky than GreenX Metals. It trades about 0.2 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.05 per unit of risk. If you would invest  4,973  in Aristocrat Leisure on September 27, 2024 and sell it today you would earn a total of  1,904  from holding Aristocrat Leisure or generate 38.29% return on investment over 90 days.

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

Aristocrat Leisure  vs.  GreenX Metals

Aristocrat Leisure

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Aristocrat Leisure are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Aristocrat Leisure unveiled solid returns over the last few months and may actually be approaching a breakup point.

GreenX Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, GreenX Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aristocrat Leisure and GreenX Metals

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

The idea behind Aristocrat Leisure and GreenX Metals 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 Global Correlations module to find global opportunities by holding instruments from different markets.