Correlation Between Greenfire Resources and Bird Construction

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

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

Diversification Opportunities for Greenfire Resources and Bird Construction

0.2

Correlation Coefficient

Greenfire Resources  Bird Construction

Modest diversification

The 3 months correlation between Greenfire and Bird is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Greenfire Resources and Bird Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bird Construction 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 Bird Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bird Construction has no effect on the direction of Greenfire Resources i.e., Greenfire Resources and Bird Construction go up and down completely randomly.

Pair Corralation between Greenfire Resources and Bird Construction

Assuming the 90 days trading horizon Greenfire Resources is expected to generate 1.66 times more return on investment than Bird Construction. However, Greenfire Resources is 1.66 times more volatile than Bird Construction. It trades about 0.07 of its potential returns per unit of risk. Bird Construction is currently generating about -0.23 per unit of risk. If you would invest  995.00  in Greenfire Resources on October 6, 2024 and sell it today you would earn a total of  39.00  from holding Greenfire Resources or generate 3.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Greenfire Resources  vs.  Bird Construction

Greenfire Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bird Construction

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bird Construction are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bird Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Greenfire Resources and Bird Construction

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

The idea behind Greenfire Resources and Bird Construction 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.