Correlation Between American Environmental and Green Planet

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

By analyzing existing cross correlation between American Environmental and Green Planet Bio, you can compare the effects of market volatilities on American Environmental and Green Planet 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 American Environmental with a short position of Green Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Environmental and Green Planet.

Diversification Opportunities for American Environmental and Green Planet

0.0

Correlation Coefficient

American Environmental  Green Planet

Pay attention - limited upside

The 3 months correlation between American and Green is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Environmental and Green Planet Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Planet Bio and American Environmental 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 American Environmental are associated (or correlated) with Green Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Planet Bio has no effect on the direction of American Environmental i.e., American Environmental and Green Planet go up and down completely randomly.

Pair Corralation between American Environmental and Green Planet

If you would invest  3.00  in Green Planet Bio on October 25, 2024 and sell it today you would earn a total of  51.00  from holding Green Planet Bio or generate 1700.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

American Environmental  vs.  Green Planet Bio

American Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Environmental is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Green Planet Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Planet Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Green Planet is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Environmental and Green Planet

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

The idea behind American Environmental and Green Planet Bio 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.