Correlation Between Graphex Group and Leading Edge
Can any of the company-specific risk be diversified away by investing in both Graphex Group and Leading Edge 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 Graphex Group and Leading Edge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphex Group Limited and Leading Edge Materials, you can compare the effects of market volatilities on Graphex Group and Leading Edge 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 Graphex Group with a short position of Leading Edge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphex Group and Leading Edge.
Diversification Opportunities for Graphex Group and Leading Edge
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Graphex and Leading is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Graphex Group Limited and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Graphex Group 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 Graphex Group Limited are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Graphex Group i.e., Graphex Group and Leading Edge go up and down completely randomly.
Pair Corralation between Graphex Group and Leading Edge
Given the investment horizon of 90 days Graphex Group Limited is expected to under-perform the Leading Edge. In addition to that, Graphex Group is 1.12 times more volatile than Leading Edge Materials. It trades about -0.11 of its total potential returns per unit of risk. Leading Edge Materials is currently generating about -0.03 per unit of volatility. If you would invest 7.10 in Leading Edge Materials on September 1, 2024 and sell it today you would lose (0.40) from holding Leading Edge Materials or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graphex Group Limited vs. Leading Edge Materials
Performance |
| Timeline |
| Graphex Group Limited |
| Leading Edge Materials |
Graphex Group and Leading Edge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphex Group and Leading Edge
The main advantage of trading using opposite Graphex Group and Leading Edge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphex Group position performs unexpectedly, Leading Edge 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 Leading Edge will offset losses from the drop in Leading Edge's long position.| Graphex Group vs. Leading Edge Materials | Graphex Group vs. Lithium Australia NL | Graphex Group vs. Ardea Resources Limited | Graphex Group vs. Blackstone Minerals |
| Leading Edge vs. South32 Limited | Leading Edge vs. NioCorp Developments Ltd | Leading Edge vs. HUMANA INC | Leading Edge vs. SCOR PK |
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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