Correlation Between Vow ASA and Greenlane Renewables

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

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

Diversification Opportunities for Vow ASA and Greenlane Renewables

-0.31

Correlation Coefficient

Vow ASA  Greenlane Renewables

Very good diversification

The 3 months correlation between Vow and Greenlane is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Greenlane Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenlane Renewables and Vow ASA 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 Vow ASA are associated (or correlated) with Greenlane Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenlane Renewables has no effect on the direction of Vow ASA i.e., Vow ASA and Greenlane Renewables go up and down completely randomly.

Pair Corralation between Vow ASA and Greenlane Renewables

Assuming the 90 days horizon Vow ASA is expected to under-perform the Greenlane Renewables. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vow ASA is 2.0 times less risky than Greenlane Renewables. The pink sheet trades about -0.1 of its potential returns per unit of risk. The Greenlane Renewables is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Greenlane Renewables on September 12, 2024 and sell it today you would earn a total of  1.80  from holding Greenlane Renewables or generate 36.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Vow ASA  vs.  Greenlane Renewables

Vow ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vow ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Greenlane Renewables

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greenlane Renewables are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Greenlane Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vow ASA and Greenlane Renewables

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

The idea behind Vow ASA and Greenlane Renewables 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.