Correlation Between Green Planet and Petro Usa

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

Diversification Opportunities for Green Planet and Petro Usa

0.0

Correlation Coefficient

Green Planet  Petro Usa

Pay attention - limited upside

The 3 months correlation between Green and Petro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Green Planet Bio and Petro Usa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Usa 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 Petro Usa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Usa has no effect on the direction of Green Planet i.e., Green Planet and Petro Usa go up and down completely randomly.

Pair Corralation between Green Planet and Petro Usa

Given the investment horizon of 90 days Green Planet Bio is expected to generate 5.18 times more return on investment than Petro Usa. However, Green Planet is 5.18 times more volatile than Petro Usa. It trades about 0.11 of its potential returns per unit of risk. Petro Usa is currently generating about 0.08 per unit of risk. If you would invest  85.00  in Green Planet Bio on September 26, 2024 and sell it today you would lose (31.00) from holding Green Planet Bio or give up 36.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

Green Planet Bio  vs.  Petro Usa

Green Planet Bio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Green Planet Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Green Planet sustained solid returns over the last few months and may actually be approaching a breakup point.

Petro Usa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petro Usa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Petro Usa is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with Green Planet and Petro Usa

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

The idea behind Green Planet Bio and Petro Usa 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .