Correlation Between EnviroGold Global and Manhattan

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

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

Diversification Opportunities for EnviroGold Global and Manhattan

-0.49

Correlation Coefficient

EnviroGold Global  Manhattan

Very good diversification

The 3 months correlation between EnviroGold and Manhattan is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding EnviroGold Global Limited and Manhattan Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Limited and EnviroGold Global 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 EnviroGold Global Limited are associated (or correlated) with Manhattan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Limited has no effect on the direction of EnviroGold Global i.e., EnviroGold Global and Manhattan go up and down completely randomly.

Pair Corralation between EnviroGold Global and Manhattan

Assuming the 90 days horizon EnviroGold Global is expected to generate 4.76 times less return on investment than Manhattan. But when comparing it to its historical volatility, EnviroGold Global Limited is 4.66 times less risky than Manhattan. It trades about 0.1 of its potential returns per unit of risk. Manhattan Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.10  in Manhattan Limited on October 21, 2024 and sell it today you would lose (0.33) from holding Manhattan Limited or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.59%
Values	Daily Returns

EnviroGold Global Limited  vs.  Manhattan Limited

EnviroGold Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EnviroGold Global Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, EnviroGold Global reported solid returns over the last few months and may actually be approaching a breakup point.

Manhattan Limited

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Manhattan Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Manhattan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EnviroGold Global and Manhattan

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

The idea behind EnviroGold Global Limited and Manhattan Limited 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..