Correlation Between Applied Graphene and Haydale Graphene

Can any of the company-specific risk be diversified away by investing in both Applied Graphene 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 Applied Graphene and Haydale Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Graphene Materials and Haydale Graphene Industries, you can compare the effects of market volatilities on Applied Graphene 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 Applied Graphene with a short position of Haydale Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Graphene and Haydale Graphene.

Diversification Opportunities for Applied Graphene and Haydale Graphene

-0.5

Correlation Coefficient

Applied Graphene  Haydale Graphene

Very good diversification

The 3 months correlation between Applied and Haydale is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Applied Graphene Materials 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 Applied 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 Applied Graphene Materials 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 Applied Graphene i.e., Applied Graphene and Haydale Graphene go up and down completely randomly.

Pair Corralation between Applied Graphene and Haydale Graphene

Assuming the 90 days horizon Applied Graphene Materials is expected to generate 5.57 times more return on investment than Haydale Graphene. However, Applied Graphene is 5.57 times more volatile than Haydale Graphene Industries. It trades about 0.1 of its potential returns per unit of risk. Haydale Graphene Industries is currently generating about 0.05 per unit of risk. If you would invest  0.02  in Applied Graphene Materials on September 12, 2024 and sell it today you would lose (0.01) from holding Applied Graphene Materials or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.91%
Values	Daily Returns

Applied Graphene Materials  vs.  Haydale Graphene Industries

Applied Graphene Mat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied Graphene Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Applied Graphene is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Haydale Graphene Ind

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haydale Graphene Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Haydale Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Graphene and Haydale Graphene

The main advantage of trading using opposite Applied Graphene and Haydale Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Graphene 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 Applied Graphene Materials 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.