Correlation Between First Graphene and Black Swan

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

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

Diversification Opportunities for First Graphene and Black Swan

0.77

Correlation Coefficient

First Graphene  Black Swan

Poor diversification

The 3 months correlation between First and Black is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and Black Swan Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Swan Graphene and First 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 First Graphene are associated (or correlated) with Black Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Swan Graphene has no effect on the direction of First Graphene i.e., First Graphene and Black Swan go up and down completely randomly.

Pair Corralation between First Graphene and Black Swan

Assuming the 90 days horizon First Graphene is expected to under-perform the Black Swan. In addition to that, First Graphene is 1.67 times more volatile than Black Swan Graphene. It trades about -0.05 of its total potential returns per unit of risk. Black Swan Graphene is currently generating about -0.03 per unit of volatility. If you would invest  7.00  in Black Swan Graphene on September 20, 2024 and sell it today you would lose (1.31) from holding Black Swan Graphene or give up 18.71% of portfolio value over 90 days.

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

First Graphene  vs.  Black Swan Graphene

First Graphene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Graphene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Black Swan Graphene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Swan Graphene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Graphene and Black Swan

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

The idea behind First Graphene and Black Swan Graphene 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.