Correlation Between GreenX Metals and LPP SA

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

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

Diversification Opportunities for GreenX Metals and LPP SA

0.61

Correlation Coefficient

GreenX Metals  LPP SA

Poor diversification

The 3 months correlation between GreenX and LPP is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding GreenX Metals and LPP SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPP SA 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 LPP SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPP SA has no effect on the direction of GreenX Metals i.e., GreenX Metals and LPP SA go up and down completely randomly.

Pair Corralation between GreenX Metals and LPP SA

Assuming the 90 days trading horizon GreenX Metals is expected to generate 1.54 times more return on investment than LPP SA. However, GreenX Metals is 1.54 times more volatile than LPP SA. It trades about 0.1 of its potential returns per unit of risk. LPP SA is currently generating about 0.15 per unit of risk. If you would invest  180.00  in GreenX Metals on December 29, 2024 and sell it today you would earn a total of  26.00  from holding GreenX Metals or generate 14.44% return on investment over 90 days.

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

GreenX Metals  vs.  LPP SA

GreenX Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GreenX Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, GreenX Metals reported solid returns over the last few months and may actually be approaching a breakup point.

LPP SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LPP SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, LPP SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GreenX Metals and LPP SA

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

The idea behind GreenX Metals and LPP SA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.