Correlation Between Ceylon Graphite and Graphex Group

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

By analyzing existing cross correlation between Ceylon Graphite Corp and Graphex Group Limited, you can compare the effects of market volatilities on Ceylon Graphite and Graphex Group 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 Ceylon Graphite with a short position of Graphex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ceylon Graphite and Graphex Group.

Diversification Opportunities for Ceylon Graphite and Graphex Group

0.15

Correlation Coefficient

Ceylon Graphite  Graphex Group

Average diversification

The 3 months correlation between Ceylon and Graphex is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Graphite Corp and Graphex Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphex Group Limited and Ceylon Graphite 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 Ceylon Graphite Corp are associated (or correlated) with Graphex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphex Group Limited has no effect on the direction of Ceylon Graphite i.e., Ceylon Graphite and Graphex Group go up and down completely randomly.

Pair Corralation between Ceylon Graphite and Graphex Group

Assuming the 90 days horizon Ceylon Graphite Corp is expected to under-perform the Graphex Group. In addition to that, Ceylon Graphite is 1.82 times more volatile than Graphex Group Limited. It trades about -0.06 of its total potential returns per unit of risk. Graphex Group Limited is currently generating about -0.01 per unit of volatility. If you would invest  22.00  in Graphex Group Limited on September 4, 2024 and sell it today you would lose (1.00) from holding Graphex Group Limited or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ceylon Graphite Corp  vs.  Graphex Group Limited

Ceylon Graphite Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Graphex Group Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphex Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Graphex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ceylon Graphite and Graphex Group

The main advantage of trading using opposite Ceylon Graphite and Graphex Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Graphite position performs unexpectedly, Graphex Group 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 Graphex Group will offset losses from the drop in Graphex Group's long position.

The idea behind Ceylon Graphite Corp and Graphex Group Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.