Correlation Between StateHouse Holdings and American Green

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

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

Diversification Opportunities for StateHouse Holdings and American Green

0.05

Correlation Coefficient

StateHouse Holdings  American Green

Significant diversification

The 3 months correlation between StateHouse and American is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding StateHouse Holdings and American Green in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Green and StateHouse Holdings 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 StateHouse Holdings 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 StateHouse Holdings i.e., StateHouse Holdings and American Green go up and down completely randomly.

Pair Corralation between StateHouse Holdings and American Green

Assuming the 90 days horizon StateHouse Holdings is expected to under-perform the American Green. But the pink sheet apears to be less risky and, when comparing its historical volatility, StateHouse Holdings is 2.39 times less risky than American Green. The pink sheet trades about -0.06 of its potential returns per unit of risk. The American Green is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.04  in American Green on September 20, 2024 and sell it today you would earn a total of  0.02  from holding American Green or generate 50.0% return on investment over 90 days.

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

StateHouse Holdings  vs.  American Green

StateHouse Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StateHouse Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

American Green

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 9 (%) 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 StateHouse Holdings and American Green

The main advantage of trading using opposite StateHouse Holdings and American Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StateHouse Holdings 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 StateHouse Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.