Correlation Between Asahi Kasei and First Graphene
Can any of the company-specific risk be diversified away by investing in both Asahi Kasei 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 Asahi Kasei and First Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asahi Kasei and First Graphene, you can compare the effects of market volatilities on Asahi Kasei 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 Asahi Kasei with a short position of First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kasei and First Graphene.
Diversification Opportunities for Asahi Kasei and First Graphene
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asahi and First is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kasei and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Asahi Kasei 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 Asahi Kasei 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 Asahi Kasei i.e., Asahi Kasei and First Graphene go up and down completely randomly.
Pair Corralation between Asahi Kasei and First Graphene
Assuming the 90 days horizon Asahi Kasei is expected to generate 5.41 times less return on investment than First Graphene. But when comparing it to its historical volatility, Asahi Kasei is 5.26 times less risky than First Graphene. It trades about 0.05 of its potential returns per unit of risk. First Graphene is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.70 in First Graphene on November 3, 2024 and sell it today you would lose (0.70) from holding First Graphene or give up 14.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 54.66% |
| Values | Daily Returns |
Asahi Kasei vs. First Graphene
Performance |
| Timeline |
| Asahi Kasei |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Graphene |
Asahi Kasei and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahi Kasei and First Graphene
The main advantage of trading using opposite Asahi Kasei and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Kasei 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.| Asahi Kasei vs. Altech Batteries Limited | Asahi Kasei vs. Alumifuel Pwr Corp | Asahi Kasei vs. Shin Etsu Chemical Co | Asahi Kasei vs. ASP Isotopes Common |
| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
Check out your portfolio center.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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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