Correlation Between Green Technology and Allkem

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

Diversification Opportunities for Green Technology and Allkem

-0.78

Correlation Coefficient

Green Technology  Allkem

Pay attention - limited upside

The 3 months correlation between Green and Allkem is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Green Technology Metals and Allkem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allkem 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 Allkem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allkem has no effect on the direction of Green Technology i.e., Green Technology and Allkem go up and down completely randomly.

Pair Corralation between Green Technology and Allkem

If you would invest  9.50  in Green Technology Metals on October 22, 2024 and sell it today you would lose (4.00) from holding Green Technology Metals or give up 42.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	0.44%
Values	Daily Returns

Green Technology Metals  vs.  Allkem

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 latest fragile performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Allkem

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Green Technology and Allkem

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

The idea behind Green Technology Metals and Allkem 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.