Correlation Between Green Cures and Kona Gold

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

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

Diversification Opportunities for Green Cures and Kona Gold

-0.24

Correlation Coefficient

Green Cures  Kona Gold

Very good diversification

The 3 months correlation between Green and Kona is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Green Cures Botanical and Kona Gold Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kona Gold Solutions and Green Cures 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 Green Cures Botanical are associated (or correlated) with Kona Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kona Gold Solutions has no effect on the direction of Green Cures i.e., Green Cures and Kona Gold go up and down completely randomly.

Pair Corralation between Green Cures and Kona Gold

Given the investment horizon of 90 days Green Cures Botanical is expected to generate 2.35 times more return on investment than Kona Gold. However, Green Cures is 2.35 times more volatile than Kona Gold Solutions. It trades about 0.16 of its potential returns per unit of risk. Kona Gold Solutions is currently generating about 0.04 per unit of risk. If you would invest  0.06  in Green Cures Botanical on September 13, 2024 and sell it today you would lose (0.05) from holding Green Cures Botanical or give up 83.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Green Cures Botanical  vs.  Kona Gold Solutions

Green Cures Botanical

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Green Cures Botanical are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Green Cures unveiled solid returns over the last few months and may actually be approaching a breakup point.

Kona Gold Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kona Gold Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly sluggish forward-looking signals, Kona Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Green Cures and Kona Gold

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

The idea behind Green Cures Botanical and Kona Gold Solutions 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.