Correlation Between KRISPY KREME and GREENX METALS

Can any of the company-specific risk be diversified away by investing in both KRISPY KREME and GREENX METALS 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 KRISPY KREME and GREENX METALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KRISPY KREME DL 01 and GREENX METALS LTD, you can compare the effects of market volatilities on KRISPY KREME and GREENX METALS 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 KRISPY KREME with a short position of GREENX METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KRISPY KREME and GREENX METALS.

Diversification Opportunities for KRISPY KREME and GREENX METALS

0.13

Correlation Coefficient

KRISPY KREME  GREENX METALS

Average diversification

The 3 months correlation between KRISPY and GREENX is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding KRISPY KREME DL 01 and GREENX METALS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENX METALS LTD and KRISPY KREME 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 KRISPY KREME DL 01 are associated (or correlated) with GREENX METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENX METALS LTD has no effect on the direction of KRISPY KREME i.e., KRISPY KREME and GREENX METALS go up and down completely randomly.

Pair Corralation between KRISPY KREME and GREENX METALS

Assuming the 90 days horizon KRISPY KREME DL 01 is expected to under-perform the GREENX METALS. But the stock apears to be less risky and, when comparing its historical volatility, KRISPY KREME DL 01 is 2.06 times less risky than GREENX METALS. The stock trades about -0.07 of its potential returns per unit of risk. The GREENX METALS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  39.00  in GREENX METALS LTD on September 17, 2024 and sell it today you would lose (1.00) from holding GREENX METALS LTD or give up 2.56% of portfolio value over 90 days.

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

KRISPY KREME DL 01  vs.  GREENX METALS LTD

KRISPY KREME DL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KRISPY KREME DL 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

GREENX METALS LTD

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GREENX METALS LTD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, GREENX METALS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with KRISPY KREME and GREENX METALS

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

The idea behind KRISPY KREME DL 01 and GREENX METALS LTD 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 Valuation module to check real value of public entities based on technical and fundamental data.