Correlation Between KLP AksjeGlobal and Greencoat Renewables

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

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

Diversification Opportunities for KLP AksjeGlobal and Greencoat Renewables

-0.58

Correlation Coefficient

KLP AksjeGlobal  Greencoat Renewables

Excellent diversification

The 3 months correlation between KLP and Greencoat is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding KLP AksjeGlobal Flerfaktor and Greencoat Renewables PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greencoat Renewables PLC and KLP AksjeGlobal 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 KLP AksjeGlobal Flerfaktor are associated (or correlated) with Greencoat Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greencoat Renewables PLC has no effect on the direction of KLP AksjeGlobal i.e., KLP AksjeGlobal and Greencoat Renewables go up and down completely randomly.

Pair Corralation between KLP AksjeGlobal and Greencoat Renewables

Assuming the 90 days trading horizon KLP AksjeGlobal Flerfaktor is expected to generate 0.34 times more return on investment than Greencoat Renewables. However, KLP AksjeGlobal Flerfaktor is 2.96 times less risky than Greencoat Renewables. It trades about 0.18 of its potential returns per unit of risk. Greencoat Renewables PLC is currently generating about -0.15 per unit of risk. If you would invest  229,034  in KLP AksjeGlobal Flerfaktor on September 17, 2024 and sell it today you would earn a total of  10,784  from holding KLP AksjeGlobal Flerfaktor or generate 4.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.92%
Values	Daily Returns

KLP AksjeGlobal Flerfaktor  vs.  Greencoat Renewables PLC

KLP AksjeGlobal Fler

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KLP AksjeGlobal Flerfaktor are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, KLP AksjeGlobal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Greencoat Renewables PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greencoat Renewables PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with KLP AksjeGlobal and Greencoat Renewables

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

The idea behind KLP AksjeGlobal Flerfaktor and Greencoat Renewables PLC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.