Correlation Between Greenfire Resources and Adcore

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

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

Diversification Opportunities for Greenfire Resources and Adcore

-0.33

Correlation Coefficient

Greenfire Resources  Adcore

Very good diversification

The 3 months correlation between Greenfire and Adcore is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Greenfire Resources and Adcore Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adcore Inc and Greenfire Resources 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 Greenfire Resources are associated (or correlated) with Adcore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adcore Inc has no effect on the direction of Greenfire Resources i.e., Greenfire Resources and Adcore go up and down completely randomly.

Pair Corralation between Greenfire Resources and Adcore

Assuming the 90 days trading horizon Greenfire Resources is expected to generate 0.89 times more return on investment than Adcore. However, Greenfire Resources is 1.13 times less risky than Adcore. It trades about 0.03 of its potential returns per unit of risk. Adcore Inc is currently generating about -0.02 per unit of risk. If you would invest  994.00  in Greenfire Resources on September 3, 2024 and sell it today you would earn a total of  28.00  from holding Greenfire Resources or generate 2.82% return on investment over 90 days.

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

Greenfire Resources  vs.  Adcore Inc

Greenfire Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greenfire Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Greenfire Resources is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Adcore Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adcore Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Adcore is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Greenfire Resources and Adcore

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

The idea behind Greenfire Resources and Adcore Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.