Correlation Between Greentech Metals and Australian Dairy

Can any of the company-specific risk be diversified away by investing in both Greentech Metals and Australian Dairy 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 Greentech Metals and Australian Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Greentech Metals and Australian Dairy Nutritionals, you can compare the effects of market volatilities on Greentech Metals and Australian Dairy 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 Greentech Metals with a short position of Australian Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Greentech Metals and Australian Dairy.

Diversification Opportunities for Greentech Metals and Australian Dairy

-0.12

Correlation Coefficient

Greentech Metals  Australian Dairy

Good diversification

The 3 months correlation between Greentech and Australian is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Greentech Metals and Australian Dairy Nutritionals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Dairy Nut and Greentech Metals 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 Greentech Metals are associated (or correlated) with Australian Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Dairy Nut has no effect on the direction of Greentech Metals i.e., Greentech Metals and Australian Dairy go up and down completely randomly.

Pair Corralation between Greentech Metals and Australian Dairy

Assuming the 90 days trading horizon Greentech Metals is expected to generate 1.39 times more return on investment than Australian Dairy. However, Greentech Metals is 1.39 times more volatile than Australian Dairy Nutritionals. It trades about 0.12 of its potential returns per unit of risk. Australian Dairy Nutritionals is currently generating about 0.03 per unit of risk. If you would invest  4.90  in Greentech Metals on April 25, 2025 and sell it today you would earn a total of  2.00  from holding Greentech Metals or generate 40.82% return on investment over 90 days.

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

Greentech Metals  vs.  Australian Dairy Nutritionals

Greentech Metals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Greentech Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Greentech Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Australian Dairy Nut

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Dairy Nutritionals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Australian Dairy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Greentech Metals and Australian Dairy

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

The idea behind Greentech Metals and Australian Dairy Nutritionals 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.