Correlation Between Graphene Manufacturing and 5E Advanced

Can any of the company-specific risk be diversified away by investing in both Graphene Manufacturing and 5E Advanced 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 Graphene Manufacturing and 5E Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graphene Manufacturing Group and 5E Advanced Materials, you can compare the effects of market volatilities on Graphene Manufacturing and 5E Advanced 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 Graphene Manufacturing with a short position of 5E Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Manufacturing and 5E Advanced.

Diversification Opportunities for Graphene Manufacturing and 5E Advanced

0.31

Correlation Coefficient

Graphene Manufacturing  5E Advanced

Weak diversification

The 3 months correlation between Graphene and FEAM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Manufacturing Group and 5E Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5E Advanced Materials and Graphene Manufacturing 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 Graphene Manufacturing Group are associated (or correlated) with 5E Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5E Advanced Materials has no effect on the direction of Graphene Manufacturing i.e., Graphene Manufacturing and 5E Advanced go up and down completely randomly.

Pair Corralation between Graphene Manufacturing and 5E Advanced

Assuming the 90 days horizon Graphene Manufacturing Group is expected to generate 0.83 times more return on investment than 5E Advanced. However, Graphene Manufacturing Group is 1.2 times less risky than 5E Advanced. It trades about -0.03 of its potential returns per unit of risk. 5E Advanced Materials is currently generating about -0.07 per unit of risk. If you would invest  172.00  in Graphene Manufacturing Group on September 5, 2024 and sell it today you would lose (129.00) from holding Graphene Manufacturing Group or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Graphene Manufacturing Group  vs.  5E Advanced Materials

Graphene Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

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

5E Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5E Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Graphene Manufacturing and 5E Advanced

The main advantage of trading using opposite Graphene Manufacturing and 5E Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphene Manufacturing position performs unexpectedly, 5E Advanced 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 5E Advanced will offset losses from the drop in 5E Advanced's long position.

The idea behind Graphene Manufacturing Group and 5E Advanced 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.