Correlation Between GreenFirst Forest and Itafos Corp

Can any of the company-specific risk be diversified away by investing in both GreenFirst Forest and Itafos Corp 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 GreenFirst Forest and Itafos Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GreenFirst Forest Products and Itafos Corp, you can compare the effects of market volatilities on GreenFirst Forest and Itafos Corp 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 GreenFirst Forest with a short position of Itafos Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of GreenFirst Forest and Itafos Corp.

Diversification Opportunities for GreenFirst Forest and Itafos Corp

-0.74

Correlation Coefficient

GreenFirst Forest  Itafos Corp

Pay attention - limited upside

The 3 months correlation between GreenFirst and Itafos is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding GreenFirst Forest Products and Itafos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itafos Corp and GreenFirst Forest 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 GreenFirst Forest Products are associated (or correlated) with Itafos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itafos Corp has no effect on the direction of GreenFirst Forest i.e., GreenFirst Forest and Itafos Corp go up and down completely randomly.

Pair Corralation between GreenFirst Forest and Itafos Corp

Assuming the 90 days horizon GreenFirst Forest Products is expected to under-perform the Itafos Corp. In addition to that, GreenFirst Forest is 1.5 times more volatile than Itafos Corp. It trades about -0.14 of its total potential returns per unit of risk. Itafos Corp is currently generating about 0.17 per unit of volatility. If you would invest  177.00  in Itafos Corp on December 22, 2024 and sell it today you would earn a total of  52.00  from holding Itafos Corp or generate 29.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

GreenFirst Forest Products  vs.  Itafos Corp

GreenFirst Forest

Risk-Adjusted Performance

Very Weak

Over the last 90 days GreenFirst Forest Products has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Itafos Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Itafos Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Itafos Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GreenFirst Forest and Itafos Corp

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

The idea behind GreenFirst Forest Products and Itafos Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.