Correlation Between Cass Information and Greenland Hong

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

By analyzing existing cross correlation between Cass Information Systems and Greenland Hong Kong, you can compare the effects of market volatilities on Cass Information and Greenland Hong 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 Cass Information with a short position of Greenland Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Greenland Hong.

Diversification Opportunities for Cass Information and Greenland Hong

-0.41

Correlation Coefficient

Cass Information  Greenland Hong

Very good diversification

The 3 months correlation between Cass and Greenland is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Greenland Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenland Hong Kong and Cass Information 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 Cass Information Systems are associated (or correlated) with Greenland Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenland Hong Kong has no effect on the direction of Cass Information i.e., Cass Information and Greenland Hong go up and down completely randomly.

Pair Corralation between Cass Information and Greenland Hong

Assuming the 90 days horizon Cass Information is expected to generate 104.55 times less return on investment than Greenland Hong. But when comparing it to its historical volatility, Cass Information Systems is 8.43 times less risky than Greenland Hong. It trades about 0.0 of its potential returns per unit of risk. Greenland Hong Kong is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.70  in Greenland Hong Kong on October 11, 2024 and sell it today you would lose (6.00) from holding Greenland Hong Kong or give up 68.97% of portfolio value over 90 days.

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

Cass Information Systems  vs.  Greenland Hong Kong

Cass Information Systems

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cass Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Greenland Hong Kong

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenland Hong Kong has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Greenland Hong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cass Information and Greenland Hong

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

The idea behind Cass Information Systems and Greenland Hong Kong 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.