Correlation Between Neo Battery and ZEN Graphene
Can any of the company-specific risk be diversified away by investing in both Neo Battery and ZEN 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 Neo Battery and ZEN Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neo Battery Materials and ZEN Graphene Solutions, you can compare the effects of market volatilities on Neo Battery and ZEN 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 Neo Battery with a short position of ZEN Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Battery and ZEN Graphene.
Diversification Opportunities for Neo Battery and ZEN Graphene
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Neo and ZEN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions and Neo Battery 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 Neo Battery Materials are associated (or correlated) with ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Neo Battery i.e., Neo Battery and ZEN Graphene go up and down completely randomly.
Pair Corralation between Neo Battery and ZEN Graphene
Assuming the 90 days horizon Neo Battery Materials is expected to generate 1.07 times more return on investment than ZEN Graphene. However, Neo Battery is 1.07 times more volatile than ZEN Graphene Solutions. It trades about 0.4 of its potential returns per unit of risk. ZEN Graphene Solutions is currently generating about 0.36 per unit of risk. If you would invest 46.00 in Neo Battery Materials on September 2, 2024 and sell it today you would earn a total of 42.00 from holding Neo Battery Materials or generate 91.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neo Battery Materials vs. ZEN Graphene Solutions
Performance |
| Timeline |
| Neo Battery Materials |
| ZEN Graphene Solutions |
Neo Battery and ZEN Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neo Battery and ZEN Graphene
The main advantage of trading using opposite Neo Battery and ZEN Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Battery position performs unexpectedly, ZEN 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 ZEN Graphene will offset losses from the drop in ZEN Graphene's long position.The idea behind Neo Battery Materials and ZEN Graphene Solutions 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.| ZEN Graphene vs. American Manganese | ZEN Graphene vs. Frontier Lithium | ZEN Graphene vs. Graphene Manufacturing Group | ZEN Graphene vs. Northern Graphite |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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