Correlation Between Green Technology and Mineral Res

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

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

Diversification Opportunities for Green Technology and Mineral Res

0.63

Correlation Coefficient

Green Technology  Mineral Res

Poor diversification

The 3 months correlation between Green and Mineral is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Mineral Res in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Res and Green Technology 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 Technology Metals are associated (or correlated) with Mineral Res. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Res has no effect on the direction of Green Technology i.e., Green Technology and Mineral Res go up and down completely randomly.

Pair Corralation between Green Technology and Mineral Res

Assuming the 90 days horizon Green Technology Metals is expected to generate 4.79 times more return on investment than Mineral Res. However, Green Technology is 4.79 times more volatile than Mineral Res. It trades about 0.02 of its potential returns per unit of risk. Mineral Res is currently generating about -0.06 per unit of risk. If you would invest  18.00  in Green Technology Metals on October 7, 2024 and sell it today you would lose (12.80) from holding Green Technology Metals or give up 71.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.6%
Values	Daily Returns

Green Technology Metals  vs.  Mineral Res

Green Technology Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Technology Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Green Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Mineral Res

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mineral Res has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Green Technology and Mineral Res

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

The idea behind Green Technology Metals and Mineral Res 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.