Correlation Between Green Planet and Alpha Star

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

By analyzing existing cross correlation between Green Planet Bio and Alpha Star Acquisition, you can compare the effects of market volatilities on Green Planet and Alpha Star 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 Green Planet with a short position of Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Planet and Alpha Star.

Diversification Opportunities for Green Planet and Alpha Star

-0.23

Correlation Coefficient

Green Planet  Alpha Star

Very good diversification

The 3 months correlation between Green and Alpha is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Green Planet Bio and Alpha Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Star Acquisition and Green Planet 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 Green Planet Bio are associated (or correlated) with Alpha Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Star Acquisition has no effect on the direction of Green Planet i.e., Green Planet and Alpha Star go up and down completely randomly.

Pair Corralation between Green Planet and Alpha Star

Given the investment horizon of 90 days Green Planet Bio is expected to generate 30.37 times more return on investment than Alpha Star. However, Green Planet is 30.37 times more volatile than Alpha Star Acquisition. It trades about 0.15 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.19 per unit of risk. If you would invest  54.00  in Green Planet Bio on December 27, 2024 and sell it today you would lose (3.00) from holding Green Planet Bio or give up 5.56% of portfolio value over 90 days.

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

Green Planet Bio  vs.  Alpha Star Acquisition

Green Planet Bio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Planet Bio are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady essential indicators, Green Planet sustained solid returns over the last few months and may actually be approaching a breakup point.

Alpha Star Acquisition

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Star Acquisition are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Alpha Star sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Planet and Alpha Star

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

The idea behind Green Planet Bio and Alpha Star Acquisition 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.