Correlation Between Green Planet and Kasten

Can any of the company-specific risk be diversified away by investing in both Green Planet and Kasten 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 Kasten 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 Kasten Inc, you can compare the effects of market volatilities on Green Planet and Kasten 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 Kasten. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Planet and Kasten.

Diversification Opportunities for Green Planet and Kasten

-0.08

Correlation Coefficient

Green Planet  Kasten

Good diversification

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

Pair Corralation between Green Planet and Kasten

Given the investment horizon of 90 days Green Planet Bio is expected to generate 0.41 times more return on investment than Kasten. However, Green Planet Bio is 2.45 times less risky than Kasten. It trades about 0.1 of its potential returns per unit of risk. Kasten Inc is currently generating about 0.03 per unit of risk. If you would invest  40.00  in Green Planet Bio on September 12, 2024 and sell it today you would earn a total of  14.00  from holding Green Planet Bio or generate 35.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Green Planet Bio  vs.  Kasten Inc

Green Planet Bio

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green Planet Bio are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile essential indicators, Green Planet sustained solid returns over the last few months and may actually be approaching a breakup point.

Kasten Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kasten Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Kasten unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Planet and Kasten

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

The idea behind Green Planet Bio and Kasten 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.