Correlation Between GreenX Metals and Cairn Homes

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

By analyzing existing cross correlation between GreenX Metals and Cairn Homes PLC, you can compare the effects of market volatilities on GreenX Metals and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenX Metals and Cairn Homes.

Diversification Opportunities for GreenX Metals and Cairn Homes

-0.6

Correlation Coefficient

GreenX Metals  Cairn Homes

Excellent diversification

The 3 months correlation between GreenX and Cairn is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GreenX Metals and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of GreenX Metals i.e., GreenX Metals and Cairn Homes go up and down completely randomly.

Pair Corralation between GreenX Metals and Cairn Homes

Assuming the 90 days trading horizon GreenX Metals is expected to generate 1.29 times more return on investment than Cairn Homes. However, GreenX Metals is 1.29 times more volatile than Cairn Homes PLC. It trades about 0.18 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about -0.14 per unit of risk. If you would invest  3,400  in GreenX Metals on December 30, 2024 and sell it today you would earn a total of  900.00  from holding GreenX Metals or generate 26.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

GreenX Metals  vs.  Cairn Homes PLC

GreenX Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, GreenX Metals exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cairn Homes PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cairn Homes PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GreenX Metals and Cairn Homes

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

The idea behind GreenX Metals and Cairn Homes PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.