Correlation Between 22nd Century and Green Globe

Can any of the company-specific risk be diversified away by investing in both 22nd Century and Green Globe 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 22nd Century and Green Globe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 22nd Century Group and Green Globe International, you can compare the effects of market volatilities on 22nd Century and Green Globe 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 22nd Century with a short position of Green Globe. Check out your portfolio center. Please also check ongoing floating volatility patterns of 22nd Century and Green Globe.

Diversification Opportunities for 22nd Century and Green Globe

0.77

Correlation Coefficient

22nd Century  Green Globe

Poor diversification

The 3 months correlation between 22nd and Green is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding 22nd Century Group and Green Globe International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Globe International and 22nd Century 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 22nd Century Group are associated (or correlated) with Green Globe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Globe International has no effect on the direction of 22nd Century i.e., 22nd Century and Green Globe go up and down completely randomly.

Pair Corralation between 22nd Century and Green Globe

Given the investment horizon of 90 days 22nd Century Group is expected to under-perform the Green Globe. But the stock apears to be less risky and, when comparing its historical volatility, 22nd Century Group is 4.19 times less risky than Green Globe. The stock trades about -0.11 of its potential returns per unit of risk. The Green Globe International is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Green Globe International on December 27, 2024 and sell it today you would lose (0.01) from holding Green Globe International or give up 33.33% of portfolio value over 90 days.

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

22nd Century Group  vs.  Green Globe International

22nd Century Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days 22nd Century Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Green Globe International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Green Globe International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting forward indicators, Green Globe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 22nd Century and Green Globe

The main advantage of trading using opposite 22nd Century and Green Globe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 22nd Century position performs unexpectedly, Green Globe 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 Globe will offset losses from the drop in Green Globe's long position.

The idea behind 22nd Century Group and Green Globe International 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.