Correlation Between Graphene Manufacturing and Magna International
Can any of the company-specific risk be diversified away by investing in both Graphene Manufacturing and Magna 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 Graphene Manufacturing and Magna International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphene Manufacturing Group and Magna International, you can compare the effects of market volatilities on Graphene Manufacturing and Magna 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 Graphene Manufacturing with a short position of Magna International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Manufacturing and Magna International.
Diversification Opportunities for Graphene Manufacturing and Magna International
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Graphene and Magna is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Manufacturing Group and Magna International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna International and Graphene Manufacturing 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 Graphene Manufacturing Group are associated (or correlated) with Magna International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna International has no effect on the direction of Graphene Manufacturing i.e., Graphene Manufacturing and Magna International go up and down completely randomly.
Pair Corralation between Graphene Manufacturing and Magna International
Assuming the 90 days horizon Graphene Manufacturing Group is expected to generate 3.63 times more return on investment than Magna International. However, Graphene Manufacturing is 3.63 times more volatile than Magna International. It trades about 0.25 of its potential returns per unit of risk. Magna International is currently generating about -0.08 per unit of risk. If you would invest 63.00 in Graphene Manufacturing Group on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Graphene Manufacturing Group or generate 31.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graphene Manufacturing Group vs. Magna International
Performance |
| Timeline |
| Graphene Manufacturing |
| Magna International |
Graphene Manufacturing and Magna International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphene Manufacturing and Magna International
The main advantage of trading using opposite Graphene Manufacturing and Magna International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphene Manufacturing position performs unexpectedly, Magna 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 Magna International will offset losses from the drop in Magna International's long position.| Graphene Manufacturing vs. Graphene Manufacturing Group | Graphene Manufacturing vs. ZEN Graphene Solutions | Graphene Manufacturing vs. NanoXplore | Graphene Manufacturing vs. Neo Battery Materials |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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