Correlation Between EBullion and GreenBank Capital

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

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

Diversification Opportunities for EBullion and GreenBank Capital

0.62

Correlation Coefficient

EBullion  GreenBank Capital

Poor diversification

The 3 months correlation between EBullion and GreenBank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding EBullion and GreenBank Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenBank Capital and EBullion 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 EBullion are associated (or correlated) with GreenBank Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenBank Capital has no effect on the direction of EBullion i.e., EBullion and GreenBank Capital go up and down completely randomly.

Pair Corralation between EBullion and GreenBank Capital

Given the investment horizon of 90 days EBullion is expected to generate 13.71 times less return on investment than GreenBank Capital. But when comparing it to its historical volatility, EBullion is 4.01 times less risky than GreenBank Capital. It trades about 0.03 of its potential returns per unit of risk. GreenBank Capital is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in GreenBank Capital on September 4, 2024 and sell it today you would lose (11.13) from holding GreenBank Capital or give up 92.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	30.77%
Values	Daily Returns

EBullion  vs.  GreenBank Capital

EBullion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EBullion has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, EBullion is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

GreenBank Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GreenBank Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental drivers, GreenBank Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EBullion and GreenBank Capital

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

The idea behind EBullion and GreenBank Capital 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.