Correlation Between Graphene Manufacturing and First Graphene

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

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

Diversification Opportunities for Graphene Manufacturing and First Graphene

0.51

Correlation Coefficient

Graphene Manufacturing  First Graphene

Very weak diversification

The 3 months correlation between Graphene and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Manufacturing Group and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Graphene Manufacturing 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 Manufacturing Group are associated (or correlated) with First Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Graphene has no effect on the direction of Graphene Manufacturing i.e., Graphene Manufacturing and First Graphene go up and down completely randomly.

Pair Corralation between Graphene Manufacturing and First Graphene

Assuming the 90 days horizon Graphene Manufacturing Group is expected to under-perform the First Graphene. But the otc stock apears to be less risky and, when comparing its historical volatility, Graphene Manufacturing Group is 2.53 times less risky than First Graphene. The otc stock trades about -0.04 of its potential returns per unit of risk. The First Graphene is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.40  in First Graphene on August 26, 2024 and sell it today you would lose (6.20) from holding First Graphene or give up 73.81% of portfolio value over 90 days.

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

Graphene Manufacturing Group  vs.  First Graphene

Graphene Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphene Manufacturing Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

First Graphene

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Graphene Manufacturing and First Graphene

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

The idea behind Graphene Manufacturing Group and First Graphene 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.