Correlation Between Ganfeng Lithium and First Graphene

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

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

Diversification Opportunities for Ganfeng Lithium and First Graphene

-0.43

Correlation Coefficient

Ganfeng Lithium  First Graphene

Very good diversification

The 3 months correlation between Ganfeng and First is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ganfeng Lithium Co and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Ganfeng Lithium 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 Ganfeng Lithium Co are associated (or correlated) with First Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Graphene has no effect on the direction of Ganfeng Lithium i.e., Ganfeng Lithium and First Graphene go up and down completely randomly.

Pair Corralation between Ganfeng Lithium and First Graphene

Assuming the 90 days horizon Ganfeng Lithium is expected to generate 11.76 times less return on investment than First Graphene. But when comparing it to its historical volatility, Ganfeng Lithium Co is 2.42 times less risky than First Graphene. It trades about 0.01 of its potential returns per unit of risk. First Graphene is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  7.70  in First Graphene on September 20, 2024 and sell it today you would lose (5.70) from holding First Graphene or give up 74.03% of portfolio value over 90 days.

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

Ganfeng Lithium Co  vs.  First Graphene

Ganfeng Lithium

Risk-Adjusted Performance

5 of 100

Modest

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

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.

Pair Trading with Ganfeng Lithium and First Graphene

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

The idea behind Ganfeng Lithium Co and First 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.