Correlation Between GREENLIGHT CAPRE and AALBERTS IND

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

By analyzing existing cross correlation between GREENLIGHT CAPRE A and AALBERTS IND, you can compare the effects of market volatilities on GREENLIGHT CAPRE and AALBERTS IND 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 GREENLIGHT CAPRE with a short position of AALBERTS IND. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENLIGHT CAPRE and AALBERTS IND.

Diversification Opportunities for GREENLIGHT CAPRE and AALBERTS IND

-0.19

Correlation Coefficient

GREENLIGHT CAPRE  AALBERTS IND

Good diversification

The 3 months correlation between GREENLIGHT and AALBERTS is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding GREENLIGHT CAPRE A and AALBERTS IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AALBERTS IND and GREENLIGHT CAPRE 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 GREENLIGHT CAPRE A are associated (or correlated) with AALBERTS IND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AALBERTS IND has no effect on the direction of GREENLIGHT CAPRE i.e., GREENLIGHT CAPRE and AALBERTS IND go up and down completely randomly.

Pair Corralation between GREENLIGHT CAPRE and AALBERTS IND

Assuming the 90 days horizon GREENLIGHT CAPRE A is expected to under-perform the AALBERTS IND. But the stock apears to be less risky and, when comparing its historical volatility, GREENLIGHT CAPRE A is 1.23 times less risky than AALBERTS IND. The stock trades about -0.06 of its potential returns per unit of risk. The AALBERTS IND is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,422  in AALBERTS IND on December 25, 2024 and sell it today you would lose (138.00) from holding AALBERTS IND or give up 4.03% of portfolio value over 90 days.

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

GREENLIGHT CAPRE A  vs.  AALBERTS IND

GREENLIGHT CAPRE A

Risk-Adjusted Performance

Very Weak

Over the last 90 days GREENLIGHT CAPRE A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AALBERTS IND

Risk-Adjusted Performance

Very Weak

Over the last 90 days AALBERTS IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AALBERTS IND 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 GREENLIGHT CAPRE and AALBERTS IND

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

The idea behind GREENLIGHT CAPRE A and AALBERTS IND 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.