Correlation Between Flameret and First Graphene
Can any of the company-specific risk be diversified away by investing in both Flameret 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 Flameret and First Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flameret and First Graphene, you can compare the effects of market volatilities on Flameret 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 Flameret with a short position of First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flameret and First Graphene.
Diversification Opportunities for Flameret and First Graphene
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flameret and First is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Flameret and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Flameret 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 Flameret 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 Flameret i.e., Flameret and First Graphene go up and down completely randomly.
Pair Corralation between Flameret and First Graphene
Given the investment horizon of 90 days Flameret is expected to under-perform the First Graphene. In addition to that, Flameret is 1.08 times more volatile than First Graphene. It trades about -0.09 of its total potential returns per unit of risk. First Graphene is currently generating about -0.08 per unit of volatility. If you would invest 3.00 in First Graphene on August 29, 2024 and sell it today you would lose (0.80) from holding First Graphene or give up 26.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flameret vs. First Graphene
Performance |
| Timeline |
| Flameret |
| First Graphene |
Flameret and First Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flameret and First Graphene
The main advantage of trading using opposite Flameret and First Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flameret 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.| Flameret vs. Origin Materials | Flameret vs. BASF SE NA | Flameret vs. Braskem SA Class | Flameret vs. Lsb Industries |
| 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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