Correlation Between Itafos Corp and GreenFirst Forest

Can any of the company-specific risk be diversified away by investing in both Itafos Corp and GreenFirst Forest 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 Itafos Corp and GreenFirst Forest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Itafos Corp and GreenFirst Forest Products, you can compare the effects of market volatilities on Itafos Corp and GreenFirst Forest 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 Itafos Corp with a short position of GreenFirst Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Itafos Corp and GreenFirst Forest.

Diversification Opportunities for Itafos Corp and GreenFirst Forest

0.15

Correlation Coefficient

Itafos Corp  GreenFirst Forest

Average diversification

The 3 months correlation between Itafos and GreenFirst is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Itafos Corp and GreenFirst Forest Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenFirst Forest and Itafos Corp 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 Itafos Corp are associated (or correlated) with GreenFirst Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenFirst Forest has no effect on the direction of Itafos Corp i.e., Itafos Corp and GreenFirst Forest go up and down completely randomly.

Pair Corralation between Itafos Corp and GreenFirst Forest

Assuming the 90 days trading horizon Itafos Corp is expected to generate 1.06 times more return on investment than GreenFirst Forest. However, Itafos Corp is 1.06 times more volatile than GreenFirst Forest Products. It trades about 0.11 of its potential returns per unit of risk. GreenFirst Forest Products is currently generating about -0.28 per unit of risk. If you would invest  164.00  in Itafos Corp on September 4, 2024 and sell it today you would earn a total of  8.00  from holding Itafos Corp or generate 4.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Itafos Corp  vs.  GreenFirst Forest Products

Itafos Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Itafos Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Itafos Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GreenFirst Forest

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GreenFirst Forest Products are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, GreenFirst Forest displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Itafos Corp and GreenFirst Forest

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

The idea behind Itafos Corp and GreenFirst Forest Products 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.