Correlation Between First Graphene and AdvanSix
Can any of the company-specific risk be diversified away by investing in both First Graphene and AdvanSix 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 First Graphene and AdvanSix into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Graphene and AdvanSix, you can compare the effects of market volatilities on First Graphene and AdvanSix 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 First Graphene with a short position of AdvanSix. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Graphene and AdvanSix.
Diversification Opportunities for First Graphene and AdvanSix
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and AdvanSix is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and First Graphene 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 First Graphene are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of First Graphene i.e., First Graphene and AdvanSix go up and down completely randomly.
Pair Corralation between First Graphene and AdvanSix
Assuming the 90 days horizon First Graphene is expected to under-perform the AdvanSix. In addition to that, First Graphene is 4.05 times more volatile than AdvanSix. It trades about -0.11 of its total potential returns per unit of risk. AdvanSix is currently generating about 0.24 per unit of volatility. If you would invest 2,886 in AdvanSix on August 28, 2024 and sell it today you would earn a total of 348.00 from holding AdvanSix or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Graphene vs. AdvanSix
Performance |
| Timeline |
| First Graphene |
| AdvanSix |
First Graphene and AdvanSix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Graphene and AdvanSix
The main advantage of trading using opposite First Graphene and AdvanSix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Graphene position performs unexpectedly, AdvanSix 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 AdvanSix will offset losses from the drop in AdvanSix's long position.| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
| AdvanSix vs. Methanex | AdvanSix vs. Lsb Industries | AdvanSix vs. Green Plains Renewable | AdvanSix vs. Tronox Holdings PLC |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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