Correlation Between Global Green and Simat Technologies

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

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

Diversification Opportunities for Global Green and Simat Technologies

0.01

Correlation Coefficient

Global Green  Simat Technologies

Significant diversification

The 3 months correlation between Global and Simat is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Global Green Chemicals and Simat Technologies Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simat Technologies Public and Global Green 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 Global Green Chemicals are associated (or correlated) with Simat Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simat Technologies Public has no effect on the direction of Global Green i.e., Global Green and Simat Technologies go up and down completely randomly.

Pair Corralation between Global Green and Simat Technologies

Assuming the 90 days trading horizon Global Green Chemicals is expected to generate 0.34 times more return on investment than Simat Technologies. However, Global Green Chemicals is 2.94 times less risky than Simat Technologies. It trades about 0.01 of its potential returns per unit of risk. Simat Technologies Public is currently generating about 0.0 per unit of risk. If you would invest  458.00  in Global Green Chemicals on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Global Green Chemicals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Global Green Chemicals  vs.  Simat Technologies Public

Global Green Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Simat Technologies Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simat Technologies Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Simat Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Green and Simat Technologies

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

The idea behind Global Green Chemicals and Simat Technologies Public 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.