Correlation Between American Green and Greengro Tech

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

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

Diversification Opportunities for American Green and Greengro Tech

0.33

Correlation Coefficient

American Green  Greengro Tech

Weak diversification

The 3 months correlation between American and Greengro is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding American Green and Greengro Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greengro Tech and American 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 American Green are associated (or correlated) with Greengro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greengro Tech has no effect on the direction of American Green i.e., American Green and Greengro Tech go up and down completely randomly.

Pair Corralation between American Green and Greengro Tech

Given the investment horizon of 90 days American Green is expected to generate 10.98 times less return on investment than Greengro Tech. But when comparing it to its historical volatility, American Green is 6.21 times less risky than Greengro Tech. It trades about 0.07 of its potential returns per unit of risk. Greengro Tech is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Greengro Tech on May 7, 2025 and sell it today you would earn a total of  0.00  from holding Greengro Tech or generate 0.0% return on investment over 90 days.

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

American Green  vs.  Greengro Tech

American Green

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in American Green are ranked lower than 5 (%) 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.

Greengro Tech

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Greengro Tech are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Greengro Tech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Green and Greengro Tech

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

The idea behind American Green and Greengro Tech 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.