Correlation Between Solvay SA and Haydale Graphene
Can any of the company-specific risk be diversified away by investing in both Solvay SA 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 Solvay SA and Haydale Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solvay SA ADR and Haydale Graphene Industries, you can compare the effects of market volatilities on Solvay SA 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 Solvay SA with a short position of Haydale Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solvay SA and Haydale Graphene.
Diversification Opportunities for Solvay SA and Haydale Graphene
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Solvay and Haydale is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Solvay SA ADR 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 Solvay SA 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 Solvay SA ADR 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 Solvay SA i.e., Solvay SA and Haydale Graphene go up and down completely randomly.
Pair Corralation between Solvay SA and Haydale Graphene
Assuming the 90 days horizon Solvay SA ADR is expected to under-perform the Haydale Graphene. But the pink sheet apears to be less risky and, when comparing its historical volatility, Solvay SA ADR is 11.2 times less risky than Haydale Graphene. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Haydale Graphene Industries is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.31 in Haydale Graphene Industries on September 4, 2024 and sell it today you would lose (0.07) from holding Haydale Graphene Industries or give up 22.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solvay SA ADR vs. Haydale Graphene Industries
Performance |
| Timeline |
| Solvay SA ADR |
| Haydale Graphene Ind |
Solvay SA and Haydale Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solvay SA and Haydale Graphene
The main advantage of trading using opposite Solvay SA and Haydale Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solvay SA 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 Solvay SA ADR 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.| Haydale Graphene vs. Versarien plc | Haydale Graphene vs. Graphene Manufacturing Group | Haydale Graphene vs. Olin Corporation | Haydale Graphene 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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