Correlation Between Ganfeng Lithium and Haydale Graphene

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Can any of the company-specific risk be diversified away by investing in both Ganfeng Lithium and Haydale 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 Ganfeng Lithium and Haydale Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ganfeng Lithium Co and Haydale Graphene Industries, you can compare the effects of market volatilities on Ganfeng Lithium and Haydale 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 Ganfeng Lithium with a short position of Haydale Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ganfeng Lithium and Haydale Graphene.

Diversification Opportunities for Ganfeng Lithium and Haydale Graphene

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Ganfeng and Haydale is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ganfeng Lithium Co and Haydale Graphene Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haydale Graphene Ind and Ganfeng Lithium 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 Ganfeng Lithium Co are associated (or correlated) with Haydale Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haydale Graphene Ind has no effect on the direction of Ganfeng Lithium i.e., Ganfeng Lithium and Haydale Graphene go up and down completely randomly.

Pair Corralation between Ganfeng Lithium and Haydale Graphene

Assuming the 90 days horizon Ganfeng Lithium is expected to generate 2.14 times less return on investment than Haydale Graphene. But when comparing it to its historical volatility, Ganfeng Lithium Co is 4.42 times less risky than Haydale Graphene. It trades about 0.06 of its potential returns per unit of risk. Haydale Graphene Industries is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.30  in Haydale Graphene Industries on September 12, 2024 and sell it today you would lose (0.10) from holding Haydale Graphene Industries or give up 33.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ganfeng Lithium Co  vs.  Haydale Graphene Industries

 Performance 
       Timeline  
Ganfeng Lithium 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ganfeng Lithium Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ganfeng Lithium showed solid returns over the last few months and may actually be approaching a breakup point.
Haydale Graphene Ind 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Haydale Graphene Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Haydale Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Ganfeng Lithium and Haydale Graphene Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ganfeng Lithium and Haydale Graphene

The main advantage of trading using opposite Ganfeng Lithium and Haydale Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ganfeng Lithium position performs unexpectedly, Haydale 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 Haydale Graphene will offset losses from the drop in Haydale Graphene's long position.
The idea behind Ganfeng Lithium Co and Haydale Graphene Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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