Correlation Between Planet Green and Better Choice

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

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

Diversification Opportunities for Planet Green and Better Choice

-0.45

Correlation Coefficient

Planet Green  Better Choice

Very good diversification

The 3 months correlation between Planet and Better is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Planet Green Holdings and Better Choice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Better Choice and Planet Green 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 Planet Green Holdings are associated (or correlated) with Better Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Better Choice has no effect on the direction of Planet Green i.e., Planet Green and Better Choice go up and down completely randomly.

Pair Corralation between Planet Green and Better Choice

Given the investment horizon of 90 days Planet Green Holdings is expected to under-perform the Better Choice. In addition to that, Planet Green is 1.36 times more volatile than Better Choice. It trades about -0.06 of its total potential returns per unit of risk. Better Choice is currently generating about 0.08 per unit of volatility. If you would invest  178.00  in Better Choice on November 20, 2024 and sell it today you would earn a total of  28.00  from holding Better Choice or generate 15.73% return on investment over 90 days.

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

Planet Green Holdings  vs.  Better Choice

Planet Green Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Planet Green Holdings 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 March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Better Choice

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Better Choice are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Better Choice reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Planet Green and Better Choice

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

The idea behind Planet Green Holdings and Better Choice 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.