Correlation Between GainClients and American Green

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

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

Diversification Opportunities for GainClients and American Green

0.0

Correlation Coefficient

GainClients  American Green

Pay attention - limited upside

The 3 months correlation between GainClients and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GainClients and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green and GainClients 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 GainClients are associated (or correlated) with American Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Green has no effect on the direction of GainClients i.e., GainClients and American Green go up and down completely randomly.

Pair Corralation between GainClients and American Green

Given the investment horizon of 90 days GainClients is expected to generate 1.98 times more return on investment than American Green. However, GainClients is 1.98 times more volatile than American Green. It trades about 0.04 of its potential returns per unit of risk. American Green is currently generating about 0.07 per unit of risk. If you would invest  0.57  in GainClients on September 29, 2024 and sell it today you would lose (0.56) from holding GainClients or give up 98.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

GainClients  vs.  American Green

GainClients

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GainClients has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, GainClients is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

American Green

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent fundamental drivers, American Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GainClients and American Green

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

The idea behind GainClients and American Green 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.