Correlation Between Haydale Graphene and Solvay SA
Can any of the company-specific risk be diversified away by investing in both Haydale Graphene and Solvay SA 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 Haydale Graphene and Solvay SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haydale Graphene Industries and Solvay SA ADR, you can compare the effects of market volatilities on Haydale Graphene and Solvay SA 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 Haydale Graphene with a short position of Solvay SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haydale Graphene and Solvay SA.
Diversification Opportunities for Haydale Graphene and Solvay SA
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Haydale and Solvay is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Haydale Graphene Industries and Solvay SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA ADR and Haydale Graphene 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 Haydale Graphene Industries are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA ADR has no effect on the direction of Haydale Graphene i.e., Haydale Graphene and Solvay SA go up and down completely randomly.
Pair Corralation between Haydale Graphene and Solvay SA
Assuming the 90 days horizon Haydale Graphene Industries is expected to generate 10.6 times more return on investment than Solvay SA. However, Haydale Graphene is 10.6 times more volatile than Solvay SA ADR. It trades about 0.07 of its potential returns per unit of risk. Solvay SA ADR is currently generating about 0.01 per unit of risk. If you would invest 0.59 in Haydale Graphene Industries on September 3, 2024 and sell it today you would lose (0.36) from holding Haydale Graphene Industries or give up 61.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haydale Graphene Industries vs. Solvay SA ADR
Performance |
| Timeline |
| Haydale Graphene Ind |
| Solvay SA ADR |
Haydale Graphene and Solvay SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haydale Graphene and Solvay SA
The main advantage of trading using opposite Haydale Graphene and Solvay SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haydale Graphene position performs unexpectedly, Solvay SA 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 Solvay SA will offset losses from the drop in Solvay SA's long position.| Haydale Graphene vs. Versarien plc | Haydale Graphene vs. Graphene Manufacturing Group | Haydale Graphene vs. Olin Corporation | Haydale Graphene vs. G6 Materials Corp |
| Solvay SA vs. Haydale Graphene Industries | Solvay SA vs. Versarien plc | Solvay SA vs. NanoXplore | Solvay SA 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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