Correlation Between First Graphene and BASF SE
Can any of the company-specific risk be diversified away by investing in both First Graphene and BASF SE 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 BASF SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Graphene and BASF SE ADR, you can compare the effects of market volatilities on First Graphene and BASF SE 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 BASF SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Graphene and BASF SE.
Diversification Opportunities for First Graphene and BASF SE
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and BASF is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and BASF SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE ADR 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 BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE ADR has no effect on the direction of First Graphene i.e., First Graphene and BASF SE go up and down completely randomly.
Pair Corralation between First Graphene and BASF SE
Assuming the 90 days horizon First Graphene is expected to generate 6.85 times more return on investment than BASF SE. However, First Graphene is 6.85 times more volatile than BASF SE ADR. It trades about 0.3 of its potential returns per unit of risk. BASF SE ADR is currently generating about 0.27 per unit of risk. If you would invest 2.10 in First Graphene on November 3, 2024 and sell it today you would earn a total of 1.90 from holding First Graphene or generate 90.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Graphene vs. BASF SE ADR
Performance |
| Timeline |
| First Graphene |
| BASF SE ADR |
First Graphene and BASF SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Graphene and BASF SE
The main advantage of trading using opposite First Graphene and BASF SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Graphene position performs unexpectedly, BASF SE 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 BASF SE will offset losses from the drop in BASF SE's long position.| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
| BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. Shin Etsu Chemical Co | BASF SE vs. First Graphene | BASF SE vs. Huntsman |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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