Correlation Between Planet Green and Laird Superfood

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

Diversification Opportunities for Planet Green and Laird Superfood

0.6

Correlation Coefficient

Planet Green  Laird Superfood

Poor diversification

The 3 months correlation between Planet and Laird is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Planet Green Holdings and Laird Superfood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laird Superfood 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 Laird Superfood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laird Superfood has no effect on the direction of Planet Green i.e., Planet Green and Laird Superfood go up and down completely randomly.

Pair Corralation between Planet Green and Laird Superfood

Given the investment horizon of 90 days Planet Green Holdings is expected to under-perform the Laird Superfood. In addition to that, Planet Green is 1.19 times more volatile than Laird Superfood. It trades about -0.17 of its total potential returns per unit of risk. Laird Superfood is currently generating about -0.04 per unit of volatility. If you would invest  800.00  in Laird Superfood on December 28, 2024 and sell it today you would lose (145.50) from holding Laird Superfood or give up 18.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Planet Green Holdings  vs.  Laird Superfood

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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Laird Superfood

Risk-Adjusted Performance

Very Weak

Over the last 90 days Laird Superfood has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Planet Green and Laird Superfood

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

The idea behind Planet Green Holdings and Laird Superfood 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.