Correlation Between Asahi Kaisei and First Graphene
Can any of the company-specific risk be diversified away by investing in both Asahi Kaisei 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 Kaisei 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 Kaisei Corp and First Graphene, you can compare the effects of market volatilities on Asahi Kaisei 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 Kaisei with a short position of First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asahi Kaisei and First Graphene.
Diversification Opportunities for Asahi Kaisei and First Graphene
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Asahi and First is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Asahi Kaisei Corp and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Asahi Kaisei 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 Kaisei Corp 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 Kaisei i.e., Asahi Kaisei and First Graphene go up and down completely randomly.
Pair Corralation between Asahi Kaisei and First Graphene
Assuming the 90 days horizon Asahi Kaisei Corp is expected to generate 0.18 times more return on investment than First Graphene. However, Asahi Kaisei Corp is 5.46 times less risky than First Graphene. It trades about 0.07 of its potential returns per unit of risk. First Graphene is currently generating about -0.09 per unit of risk. If you would invest 1,383 in Asahi Kaisei Corp on September 1, 2024 and sell it today you would earn a total of 38.00 from holding Asahi Kaisei Corp or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Asahi Kaisei Corp vs. First Graphene
Performance |
| Timeline |
| Asahi Kaisei Corp |
| First Graphene |
Asahi Kaisei and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asahi Kaisei and First Graphene
The main advantage of trading using opposite Asahi Kaisei and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asahi Kaisei 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 Kaisei vs. BASF SE NA | Asahi Kaisei vs. Braskem SA Class | Asahi Kaisei vs. Lsb Industries | Asahi Kaisei vs. Dow Inc |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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