Correlation Between Green Technology and Surge Battery

Can any of the company-specific risk be diversified away by investing in both Green Technology and Surge Battery 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 Surge Battery 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 Surge Battery Metals, you can compare the effects of market volatilities on Green Technology and Surge Battery 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 Surge Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Technology and Surge Battery.

Diversification Opportunities for Green Technology and Surge Battery

-0.31

Correlation Coefficient

Green Technology  Surge Battery

Very good diversification

The 3 months correlation between Green and Surge is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Surge Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Battery Metals 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 Surge Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Battery Metals has no effect on the direction of Green Technology i.e., Green Technology and Surge Battery go up and down completely randomly.

Pair Corralation between Green Technology and Surge Battery

Assuming the 90 days horizon Green Technology Metals is expected to generate 5.78 times more return on investment than Surge Battery. However, Green Technology is 5.78 times more volatile than Surge Battery Metals. It trades about 0.08 of its potential returns per unit of risk. Surge Battery Metals is currently generating about 0.06 per unit of risk. If you would invest  4.60  in Green Technology Metals on September 3, 2024 and sell it today you would earn a total of  0.21  from holding Green Technology Metals or generate 4.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Green Technology Metals  vs.  Surge Battery Metals

Green Technology Metals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Green Technology Metals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Green Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Surge Battery Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Surge Battery Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Surge Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Technology and Surge Battery

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

The idea behind Green Technology Metals and Surge Battery Metals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.