Correlation Between GreenFirst Forest and Interfor

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

Diversification Opportunities for GreenFirst Forest and Interfor

0.86

Correlation Coefficient

GreenFirst Forest  Interfor

Very poor diversification

The 3 months correlation between GreenFirst and Interfor is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding GreenFirst Forest Products and Interfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interfor 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 Interfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interfor has no effect on the direction of GreenFirst Forest i.e., GreenFirst Forest and Interfor go up and down completely randomly.

Pair Corralation between GreenFirst Forest and Interfor

Assuming the 90 days horizon GreenFirst Forest Products is expected to generate 2.13 times more return on investment than Interfor. However, GreenFirst Forest is 2.13 times more volatile than Interfor. It trades about 0.19 of its potential returns per unit of risk. Interfor is currently generating about 0.12 per unit of risk. If you would invest  225.00  in GreenFirst Forest Products on August 30, 2024 and sell it today you would earn a total of  170.00  from holding GreenFirst Forest Products or generate 75.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

GreenFirst Forest Products  vs.  Interfor

GreenFirst Forest

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenFirst Forest Products are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, GreenFirst Forest reported solid returns over the last few months and may actually be approaching a breakup point.

Interfor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interfor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Interfor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GreenFirst Forest and Interfor

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

The idea behind GreenFirst Forest Products and Interfor 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.