Correlation Between GreenX Metals and Eastman Chemical

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

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

Diversification Opportunities for GreenX Metals and Eastman Chemical

0.34

Correlation Coefficient

GreenX Metals  Eastman Chemical

Weak diversification

The 3 months correlation between GreenX and Eastman is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding GreenX Metals and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and GreenX Metals 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 GreenX Metals are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of GreenX Metals i.e., GreenX Metals and Eastman Chemical go up and down completely randomly.

Pair Corralation between GreenX Metals and Eastman Chemical

Assuming the 90 days trading horizon GreenX Metals is expected to generate 1.13 times more return on investment than Eastman Chemical. However, GreenX Metals is 1.13 times more volatile than Eastman Chemical Co. It trades about 0.2 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about -0.02 per unit of risk. If you would invest  3,400  in GreenX Metals on December 25, 2024 and sell it today you would earn a total of  950.00  from holding GreenX Metals or generate 27.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

GreenX Metals  vs.  Eastman Chemical Co

GreenX Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GreenX Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Eastman Chemical

Risk-Adjusted Performance

Very Weak

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

Pair Trading with GreenX Metals and Eastman Chemical

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

The idea behind GreenX Metals and Eastman Chemical Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.