Correlation Between Earth Alive and NGEx Minerals

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

By analyzing existing cross correlation between Earth Alive Clean and NGEx Minerals, you can compare the effects of market volatilities on Earth Alive and NGEx Minerals 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 Earth Alive with a short position of NGEx Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earth Alive and NGEx Minerals.

Diversification Opportunities for Earth Alive and NGEx Minerals

0.0

Correlation Coefficient

Earth Alive  NGEx Minerals

Pay attention - limited upside

The 3 months correlation between Earth and NGEx is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Earth Alive Clean and NGEx Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGEx Minerals and Earth Alive 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 Earth Alive Clean are associated (or correlated) with NGEx Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGEx Minerals has no effect on the direction of Earth Alive i.e., Earth Alive and NGEx Minerals go up and down completely randomly.

Pair Corralation between Earth Alive and NGEx Minerals

Assuming the 90 days horizon Earth Alive Clean is expected to generate 8.07 times more return on investment than NGEx Minerals. However, Earth Alive is 8.07 times more volatile than NGEx Minerals. It trades about 0.02 of its potential returns per unit of risk. NGEx Minerals is currently generating about 0.16 per unit of risk. If you would invest  2.50  in Earth Alive Clean on September 22, 2024 and sell it today you would lose (2.00) from holding Earth Alive Clean or give up 80.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Earth Alive Clean  vs.  NGEx Minerals

Earth Alive Clean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Earth Alive Clean has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Earth Alive is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

NGEx Minerals

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NGEx Minerals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, NGEx Minerals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Earth Alive and NGEx Minerals

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

The idea behind Earth Alive Clean and NGEx Minerals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.