Correlation Between Greentown Management and XP Power

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

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

Diversification Opportunities for Greentown Management and XP Power

0.58

Correlation Coefficient

Greentown Management  XP Power

Very weak diversification

The 3 months correlation between Greentown and XPPLF is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Greentown Management Holdings and XP Power Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XP Power Limited and Greentown Management 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 Greentown Management Holdings are associated (or correlated) with XP Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XP Power Limited has no effect on the direction of Greentown Management i.e., Greentown Management and XP Power go up and down completely randomly.

Pair Corralation between Greentown Management and XP Power

Assuming the 90 days horizon Greentown Management is expected to generate 3.91 times less return on investment than XP Power. But when comparing it to its historical volatility, Greentown Management Holdings is 5.72 times less risky than XP Power. It trades about 0.12 of its potential returns per unit of risk. XP Power Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  994.00  in XP Power Limited on May 25, 2025 and sell it today you would earn a total of  206.00  from holding XP Power Limited or generate 20.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

Greentown Management Holdings  vs.  XP Power Limited

Greentown Management

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Greentown Management Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, Greentown Management is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

XP Power Limited

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in XP Power Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, XP Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greentown Management and XP Power

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

The idea behind Greentown Management Holdings and XP Power Limited 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.