Correlation Between Green Star and Nano One

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

By analyzing existing cross correlation between Green Star Products and Nano One Materials, you can compare the effects of market volatilities on Green Star and Nano One 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 Star with a short position of Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Star and Nano One.

Diversification Opportunities for Green Star and Nano One

0.33

Correlation Coefficient

Green Star  Nano One

Weak diversification

The 3 months correlation between Green and Nano is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Green Star Products and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials and Green Star 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 Star Products are associated (or correlated) with Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Green Star i.e., Green Star and Nano One go up and down completely randomly.

Pair Corralation between Green Star and Nano One

Given the investment horizon of 90 days Green Star Products is expected to generate 2.36 times more return on investment than Nano One. However, Green Star is 2.36 times more volatile than Nano One Materials. It trades about 0.09 of its potential returns per unit of risk. Nano One Materials is currently generating about 0.05 per unit of risk. If you would invest  0.09  in Green Star Products on September 3, 2024 and sell it today you would earn a total of  0.02  from holding Green Star Products or generate 22.22% return on investment over 90 days.

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

Green Star Products  vs.  Nano One Materials

Green Star Products

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Green Star Products are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Green Star demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Nano One Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nano One Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Nano One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Star and Nano One

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

The idea behind Green Star Products and Nano One Materials 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.