Correlation Between First Graphene and Croda International
Can any of the company-specific risk be diversified away by investing in both First Graphene and Croda International 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 Croda International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Graphene and Croda International PLC, you can compare the effects of market volatilities on First Graphene and Croda International 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 Croda International. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Graphene and Croda International.
Diversification Opportunities for First Graphene and Croda International
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Croda is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and Croda International PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croda International PLC 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 Croda International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croda International PLC has no effect on the direction of First Graphene i.e., First Graphene and Croda International go up and down completely randomly.
Pair Corralation between First Graphene and Croda International
Assuming the 90 days horizon First Graphene is expected to generate 5.73 times more return on investment than Croda International. However, First Graphene is 5.73 times more volatile than Croda International PLC. It trades about 0.03 of its potential returns per unit of risk. Croda International PLC is currently generating about -0.03 per unit of risk. If you would invest 4.40 in First Graphene on August 25, 2024 and sell it today you would lose (2.30) from holding First Graphene or give up 52.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Graphene vs. Croda International PLC
Performance |
| Timeline |
| First Graphene |
| Croda International PLC |
First Graphene and Croda International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Graphene and Croda International
The main advantage of trading using opposite First Graphene and Croda International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Graphene position performs unexpectedly, Croda International 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 Croda International will offset losses from the drop in Croda International's long position.| First Graphene vs. Haydale Graphene Industries | First Graphene vs. Versarien plc | First Graphene vs. NanoXplore | First Graphene vs. G6 Materials Corp |
| Croda International vs. First Graphene | Croda International vs. HUMANA INC | Croda International vs. Aquagold International | Croda International vs. Barloworld Ltd ADR |
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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