Correlation Between Graphite One and Mason Graphite

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

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

Diversification Opportunities for Graphite One and Mason Graphite

0.26

Correlation Coefficient

Graphite One  Mason Graphite

Modest diversification

The 3 months correlation between Graphite and Mason is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and Mason Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mason Graphite and Graphite One 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 Graphite One are associated (or correlated) with Mason Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mason Graphite has no effect on the direction of Graphite One i.e., Graphite One and Mason Graphite go up and down completely randomly.

Pair Corralation between Graphite One and Mason Graphite

Assuming the 90 days horizon Graphite One is expected to generate 0.38 times more return on investment than Mason Graphite. However, Graphite One is 2.66 times less risky than Mason Graphite. It trades about -0.01 of its potential returns per unit of risk. Mason Graphite is currently generating about -0.04 per unit of risk. If you would invest  78.00  in Graphite One on September 12, 2024 and sell it today you would lose (4.00) from holding Graphite One or give up 5.13% of portfolio value over 90 days.

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

Graphite One  vs.  Mason Graphite

Graphite One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphite One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Graphite One is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Graphite One and Mason Graphite

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

The idea behind Graphite One and Mason Graphite 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.