Correlation Between Celanese and First Graphene
Can any of the company-specific risk be diversified away by investing in both Celanese 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 Celanese and First Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Celanese and First Graphene, you can compare the effects of market volatilities on Celanese 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 Celanese with a short position of First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celanese and First Graphene.
Diversification Opportunities for Celanese and First Graphene
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Celanese and First is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Celanese and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Celanese 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 Celanese 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 Celanese i.e., Celanese and First Graphene go up and down completely randomly.
Pair Corralation between Celanese and First Graphene
Allowing for the 90-day total investment horizon Celanese is expected to under-perform the First Graphene. But the stock apears to be less risky and, when comparing its historical volatility, Celanese is 5.5 times less risky than First Graphene. The stock trades about -0.02 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 24, 2024 and sell it today you would lose (5.90) from holding First Graphene or give up 70.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Celanese vs. First Graphene
Performance |
| Timeline |
| Celanese |
| First Graphene |
Celanese and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Celanese and First Graphene
The main advantage of trading using opposite Celanese and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celanese 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.| Celanese vs. Tronox Holdings PLC | Celanese vs. Green Plains Renewable | Celanese vs. Lsb Industries | Celanese vs. Valhi Inc |
| First Graphene vs. Origin Materials | First Graphene vs. BASF SE NA | First Graphene vs. Braskem SA Class | First Graphene vs. Lsb Industries |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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