Correlation Between Greengro Tech and Caterpillar

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

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

Diversification Opportunities for Greengro Tech and Caterpillar

0.0

Correlation Coefficient

Greengro Tech  Caterpillar

Pay attention - limited upside

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

Pair Corralation between Greengro Tech and Caterpillar

If you would invest  36,037  in Caterpillar on October 20, 2024 and sell it today you would earn a total of  2,565  from holding Caterpillar or generate 7.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Greengro Tech  vs.  Caterpillar

Greengro Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greengro Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Greengro Tech is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Caterpillar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caterpillar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caterpillar is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Greengro Tech and Caterpillar

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

The idea behind Greengro Tech and Caterpillar 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.