Correlation Between Global Clean and SW Seed

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

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

Diversification Opportunities for Global Clean and SW Seed

0.08

Correlation Coefficient

Global Clean  SW Seed

Significant diversification

The 3 months correlation between Global and SANW is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Clean Energy and SW Seed Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SW Seed Company and Global Clean 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 Global Clean Energy are associated (or correlated) with SW Seed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SW Seed Company has no effect on the direction of Global Clean i.e., Global Clean and SW Seed go up and down completely randomly.

Pair Corralation between Global Clean and SW Seed

Given the investment horizon of 90 days Global Clean Energy is expected to under-perform the SW Seed. In addition to that, Global Clean is 1.55 times more volatile than SW Seed Company. It trades about -0.16 of its total potential returns per unit of risk. SW Seed Company is currently generating about -0.02 per unit of volatility. If you would invest  843.00  in SW Seed Company on December 28, 2024 and sell it today you would lose (119.00) from holding SW Seed Company or give up 14.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Global Clean Energy  vs.  SW Seed Company

Global Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Global Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

SW Seed Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days SW Seed Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Global Clean and SW Seed

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

The idea behind Global Clean Energy and SW Seed Company 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 Global Correlations module to find global opportunities by holding instruments from different markets.