Correlation Between Green Shift and Aldebaran Resources

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

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

Diversification Opportunities for Green Shift and Aldebaran Resources

-0.15

Correlation Coefficient

Green Shift  Aldebaran Resources

Good diversification

The 3 months correlation between Green and Aldebaran is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Green Shift Commodities and Aldebaran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldebaran Resources and Green Shift 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 Shift Commodities are associated (or correlated) with Aldebaran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldebaran Resources has no effect on the direction of Green Shift i.e., Green Shift and Aldebaran Resources go up and down completely randomly.

Pair Corralation between Green Shift and Aldebaran Resources

Assuming the 90 days horizon Green Shift Commodities is expected to generate 2.57 times more return on investment than Aldebaran Resources. However, Green Shift is 2.57 times more volatile than Aldebaran Resources. It trades about 0.02 of its potential returns per unit of risk. Aldebaran Resources is currently generating about 0.04 per unit of risk. If you would invest  2.82  in Green Shift Commodities on December 29, 2024 and sell it today you would lose (0.70) from holding Green Shift Commodities or give up 24.82% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Green Shift Commodities  vs.  Aldebaran Resources

Green Shift Commodities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Green Shift Commodities are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Green Shift may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aldebaran Resources

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aldebaran Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Aldebaran Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Green Shift and Aldebaran Resources

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

The idea behind Green Shift Commodities and Aldebaran Resources 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.