Correlation Between Associated British and Planet Green

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

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

Diversification Opportunities for Associated British and Planet Green

-0.8

Correlation Coefficient

Associated British  Planet Green

Pay attention - limited upside

The 3 months correlation between Associated and Planet is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Planet Green Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Green Holdings and Associated British 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 Associated British Foods are associated (or correlated) with Planet Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Green Holdings has no effect on the direction of Associated British i.e., Associated British and Planet Green go up and down completely randomly.

Pair Corralation between Associated British and Planet Green

Assuming the 90 days horizon Associated British Foods is expected to generate 0.17 times more return on investment than Planet Green. However, Associated British Foods is 5.84 times less risky than Planet Green. It trades about 0.25 of its potential returns per unit of risk. Planet Green Holdings is currently generating about -0.1 per unit of risk. If you would invest  2,845  in Associated British Foods on February 16, 2024 and sell it today you would earn a total of  463.00  from holding Associated British Foods or generate 16.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Associated British Foods  vs.  Planet Green Holdings

Associated British Foods

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Associated British Foods are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Associated British reported solid returns over the last few months and may actually be approaching a breakup point.

Planet Green Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Planet Green Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Associated British and Planet Green

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

The idea behind Associated British Foods and Planet Green Holdings 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 Commodity Directory module to find actively traded commodities issued by global exchanges.