Correlation Between Graphene Solar and BOC Hong

Can any of the company-specific risk be diversified away by investing in both Graphene Solar and BOC Hong 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 Graphene Solar and BOC Hong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graphene Solar Technologies and BOC Hong Kong, you can compare the effects of market volatilities on Graphene Solar and BOC Hong 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 Graphene Solar with a short position of BOC Hong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Solar and BOC Hong.

Diversification Opportunities for Graphene Solar and BOC Hong

-0.7

Correlation Coefficient

Graphene Solar  BOC Hong

Excellent diversification

The 3 months correlation between Graphene and BOC is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Solar Technologies and BOC Hong Kong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Hong Kong and Graphene Solar 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 Graphene Solar Technologies are associated (or correlated) with BOC Hong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Hong Kong has no effect on the direction of Graphene Solar i.e., Graphene Solar and BOC Hong go up and down completely randomly.

Pair Corralation between Graphene Solar and BOC Hong

Given the investment horizon of 90 days Graphene Solar Technologies is expected to generate 23.85 times more return on investment than BOC Hong. However, Graphene Solar is 23.85 times more volatile than BOC Hong Kong. It trades about 0.09 of its potential returns per unit of risk. BOC Hong Kong is currently generating about 0.08 per unit of risk. If you would invest  4.80  in Graphene Solar Technologies on January 30, 2024 and sell it today you would lose (4.20) from holding Graphene Solar Technologies or give up 87.5% of portfolio value over 90 days.

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

Graphene Solar Technologies  vs.  BOC Hong Kong

Graphene Solar Techn

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Solar Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Graphene Solar showed solid returns over the last few months and may actually be approaching a breakup point.

BOC Hong Kong

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BOC Hong Kong are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, BOC Hong showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphene Solar and BOC Hong

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

The idea behind Graphene Solar Technologies and BOC Hong Kong 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.