Correlation Between H B and Applied Graphene

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

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

Diversification Opportunities for H B and Applied Graphene

-0.54

Correlation Coefficient

H B  Applied Graphene

Excellent diversification

The 3 months correlation between FUL and Applied is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding H B Fuller 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 H B 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 H B Fuller 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 H B i.e., H B and Applied Graphene go up and down completely randomly.

Pair Corralation between H B and Applied Graphene

Considering the 90-day investment horizon H B is expected to generate 459.47 times less return on investment than Applied Graphene. But when comparing it to its historical volatility, H B Fuller is 65.44 times less risky than Applied Graphene. It trades about 0.01 of its potential returns per unit of risk. 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 September 5, 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 Against
Strength	Very Weak
Accuracy	79.2%
Values	Daily Returns

H B Fuller  vs.  Applied Graphene Materials

H B Fuller

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H B Fuller has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, H B is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

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.

Pair Trading with H B and Applied Graphene

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

The idea behind H B Fuller and Applied Graphene Materials 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.