Correlation Between Charlies Holdings and Green Globe

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

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

Diversification Opportunities for Charlies Holdings and Green Globe

0.36

Correlation Coefficient

Charlies Holdings  Green Globe

Weak diversification

The 3 months correlation between Charlies and Green is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Charlies Holdings 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 Charlies Holdings 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 Charlies Holdings 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 Charlies Holdings i.e., Charlies Holdings and Green Globe go up and down completely randomly.

Pair Corralation between Charlies Holdings and Green Globe

If you would invest  0.06  in Green Globe International on September 2, 2024 and sell it today you would lose (0.02) 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	Very Weak
Accuracy	1.54%
Values	Daily Returns

Charlies Holdings  vs.  Green Globe International

Charlies Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Charlies Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Charlies Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Green Globe International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Green Globe International are ranked lower than 2 (%) 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 Charlies Holdings and Green Globe

The main advantage of trading using opposite Charlies Holdings and Green Globe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charlies Holdings 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 Charlies Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.