Correlation Between Aberforth Smaller and GreenX Metals

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Can any of the company-specific risk be diversified away by investing in both Aberforth Smaller 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 Aberforth Smaller and GreenX Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aberforth Smaller Companies and GreenX Metals, you can compare the effects of market volatilities on Aberforth Smaller 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 Aberforth Smaller with a short position of GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aberforth Smaller and GreenX Metals.

Diversification Opportunities for Aberforth Smaller and GreenX Metals

0.35
  Correlation Coefficient

Weak diversification

The 3 months correlation between Aberforth and GreenX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aberforth Smaller Companies and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals and Aberforth Smaller 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 Aberforth Smaller Companies 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 Aberforth Smaller i.e., Aberforth Smaller and GreenX Metals go up and down completely randomly.

Pair Corralation between Aberforth Smaller and GreenX Metals

Assuming the 90 days trading horizon Aberforth Smaller Companies is expected to under-perform the GreenX Metals. But the stock apears to be less risky and, when comparing its historical volatility, Aberforth Smaller Companies is 2.67 times less risky than GreenX Metals. The stock trades about -0.19 of its potential returns per unit of risk. The GreenX Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,550  in GreenX Metals on October 9, 2024 and sell it today you would earn a total of  0.00  from holding GreenX Metals or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Aberforth Smaller Companies  vs.  GreenX Metals

 Performance 
       Timeline  
Aberforth Smaller 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aberforth Smaller Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Aberforth Smaller is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
GreenX Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GreenX Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Aberforth Smaller and GreenX Metals Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aberforth Smaller and GreenX Metals

The main advantage of trading using opposite Aberforth Smaller and GreenX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aberforth Smaller 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 Aberforth Smaller Companies 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.
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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