Correlation Between AJ LUCAS and GREENX METALS

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

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

Diversification Opportunities for AJ LUCAS and GREENX METALS

0.35

Correlation Coefficient

AJ LUCAS  GREENX METALS

Weak diversification

The 3 months correlation between FW9 and GREENX is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding AJ LUCAS GROUP 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 AJ LUCAS 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 AJ LUCAS GROUP 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 AJ LUCAS i.e., AJ LUCAS and GREENX METALS go up and down completely randomly.

Pair Corralation between AJ LUCAS and GREENX METALS

Assuming the 90 days horizon AJ LUCAS GROUP is expected to generate 5.82 times more return on investment than GREENX METALS. However, AJ LUCAS is 5.82 times more volatile than GREENX METALS LTD. It trades about 0.06 of its potential returns per unit of risk. GREENX METALS LTD is currently generating about 0.01 per unit of risk. If you would invest  0.15  in AJ LUCAS GROUP on September 3, 2024 and sell it today you would lose (0.10) from holding AJ LUCAS GROUP or give up 66.67% of portfolio value over 90 days.

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

AJ LUCAS GROUP  vs.  GREENX METALS LTD

AJ LUCAS GROUP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AJ LUCAS GROUP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AJ LUCAS reported solid returns over the last few months and may actually be approaching a breakup point.

GREENX METALS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENX METALS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, GREENX METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AJ LUCAS and GREENX METALS

The main advantage of trading using opposite AJ LUCAS and GREENX METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AJ LUCAS 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 AJ LUCAS GROUP 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.

Check out your portfolio center.

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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.