Correlation Between Mazda and Greenway Technologies

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

By analyzing existing cross correlation between Mazda Motor and Greenway Technologies, you can compare the effects of market volatilities on Mazda and Greenway Technologies 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 Mazda with a short position of Greenway Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mazda and Greenway Technologies.

Diversification Opportunities for Mazda and Greenway Technologies

-0.63

Correlation Coefficient

Mazda  Greenway Technologies

Excellent diversification

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

Pair Corralation between Mazda and Greenway Technologies

Assuming the 90 days horizon Mazda Motor is expected to under-perform the Greenway Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mazda Motor is 6.27 times less risky than Greenway Technologies. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Greenway Technologies is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Greenway Technologies on September 14, 2024 and sell it today you would earn a total of  2.50  from holding Greenway Technologies or generate 125.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Mazda Motor  vs.  Greenway Technologies

Mazda Motor

Risk-Adjusted Performance

0 of 100

Very Weak

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

Greenway Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greenway Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Greenway Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mazda and Greenway Technologies

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

The idea behind Mazda Motor and Greenway Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.