Correlation Between Olin and Applied Graphene
Can any of the company-specific risk be diversified away by investing in both Olin and Applied 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 Olin and Applied Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and Applied Graphene Materials, you can compare the effects of market volatilities on Olin and Applied 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 Olin with a short position of Applied Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and Applied Graphene.
Diversification Opportunities for Olin and Applied Graphene
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Olin and Applied is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and Applied Graphene Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Graphene Mat and Olin 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 Olin Corporation are associated (or correlated) with Applied Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Graphene Mat has no effect on the direction of Olin i.e., Olin and Applied Graphene go up and down completely randomly.
Pair Corralation between Olin and Applied Graphene
Considering the 90-day investment horizon Olin Corporation is expected to under-perform the Applied Graphene. But the stock apears to be less risky and, when comparing its historical volatility, Olin Corporation is 48.77 times less risky than Applied Graphene. The stock trades about -0.06 of its potential returns per unit of risk. The Applied Graphene Materials is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Applied Graphene Materials on August 31, 2024 and sell it today you would lose (1.69) from holding Applied Graphene Materials or give up 99.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.1% |
| Values | Daily Returns |
Olin Corp. vs. Applied Graphene Materials
Performance |
| Timeline |
| Olin |
| Applied Graphene Mat |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Olin and Applied Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and Applied Graphene
The main advantage of trading using opposite Olin and Applied Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin position performs unexpectedly, Applied 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 Applied Graphene will offset losses from the drop in Applied Graphene's long position.| Olin vs. Select Energy Services | Olin vs. Westlake Chemical | Olin vs. Sensient Technologies | Olin vs. Axalta Coating Systems |
| Applied Graphene vs. First Graphene | Applied Graphene vs. Haydale Graphene Industries | Applied Graphene vs. G6 Materials Corp | Applied Graphene vs. Versarien plc |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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