Correlation Between Rocky Mountain and Greene Concepts

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

By analyzing existing cross correlation between Rocky Mountain High and Greene Concepts, you can compare the effects of market volatilities on Rocky Mountain and Greene Concepts 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 Rocky Mountain with a short position of Greene Concepts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocky Mountain and Greene Concepts.

Diversification Opportunities for Rocky Mountain and Greene Concepts

0.28

Correlation Coefficient

Rocky Mountain  Greene Concepts

Modest diversification

The 3 months correlation between Rocky and Greene is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Rocky Mountain High and Greene Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greene Concepts and Rocky Mountain 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 Rocky Mountain High are associated (or correlated) with Greene Concepts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greene Concepts has no effect on the direction of Rocky Mountain i.e., Rocky Mountain and Greene Concepts go up and down completely randomly.

Pair Corralation between Rocky Mountain and Greene Concepts

Given the investment horizon of 90 days Rocky Mountain High is expected to generate 4.25 times more return on investment than Greene Concepts. However, Rocky Mountain is 4.25 times more volatile than Greene Concepts. It trades about 0.19 of its potential returns per unit of risk. Greene Concepts is currently generating about -0.16 per unit of risk. If you would invest  0.67  in Rocky Mountain High on September 12, 2024 and sell it today you would earn a total of  0.22  from holding Rocky Mountain High or generate 32.84% return on investment over 90 days.

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

Rocky Mountain High  vs.  Greene Concepts

Rocky Mountain High

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rocky Mountain High are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Rocky Mountain sustained solid returns over the last few months and may actually be approaching a breakup point.

Greene Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greene Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward-looking signals remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Rocky Mountain and Greene Concepts

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

The idea behind Rocky Mountain High and Greene Concepts 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.