Correlation Between Graphene Manufacturing and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both Graphene Manufacturing and Northern Graphite 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 Northern Graphite 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 Northern Graphite, you can compare the effects of market volatilities on Graphene Manufacturing and Northern Graphite 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 Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Manufacturing and Northern Graphite.
Diversification Opportunities for Graphene Manufacturing and Northern Graphite
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Graphene and Northern is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Manufacturing Group and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite 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 Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of Graphene Manufacturing i.e., Graphene Manufacturing and Northern Graphite go up and down completely randomly.
Pair Corralation between Graphene Manufacturing and Northern Graphite
Assuming the 90 days horizon Graphene Manufacturing Group is expected to under-perform the Northern Graphite. But the stock apears to be less risky and, when comparing its historical volatility, Graphene Manufacturing Group is 1.54 times less risky than Northern Graphite. The stock trades about -0.04 of its potential returns per unit of risk. The Northern Graphite is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Northern Graphite on September 4, 2024 and sell it today you would lose (15.50) from holding Northern Graphite or give up 64.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
Graphene Manufacturing Group vs. Northern Graphite
Performance |
| Timeline |
| Graphene Manufacturing |
| Northern Graphite |
Graphene Manufacturing and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphene Manufacturing and Northern Graphite
The main advantage of trading using opposite Graphene Manufacturing and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphene Manufacturing position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite'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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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