Correlation Between G6 Materials and HydroGraph Clean

Can any of the company-specific risk be diversified away by investing in both G6 Materials and HydroGraph Clean 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 G6 Materials and HydroGraph Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G6 Materials Corp and HydroGraph Clean Power, you can compare the effects of market volatilities on G6 Materials and HydroGraph Clean 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 G6 Materials with a short position of HydroGraph Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of G6 Materials and HydroGraph Clean.

Diversification Opportunities for G6 Materials and HydroGraph Clean

0.58

Correlation Coefficient

G6 Materials  HydroGraph Clean

Very weak diversification

The 3 months correlation between GPHBF and HydroGraph is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding G6 Materials Corp and HydroGraph Clean Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HydroGraph Clean Power and G6 Materials 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 G6 Materials Corp are associated (or correlated) with HydroGraph Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HydroGraph Clean Power has no effect on the direction of G6 Materials i.e., G6 Materials and HydroGraph Clean go up and down completely randomly.

Pair Corralation between G6 Materials and HydroGraph Clean

Assuming the 90 days horizon G6 Materials Corp is expected to generate 6.08 times more return on investment than HydroGraph Clean. However, G6 Materials is 6.08 times more volatile than HydroGraph Clean Power. It trades about 0.06 of its potential returns per unit of risk. HydroGraph Clean Power is currently generating about 0.03 per unit of risk. If you would invest  35.00  in G6 Materials Corp on September 5, 2024 and sell it today you would lose (31.90) from holding G6 Materials Corp or give up 91.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.13%
Values	Daily Returns

G6 Materials Corp  vs.  HydroGraph Clean Power

G6 Materials Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G6 Materials Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HydroGraph Clean Power

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days HydroGraph Clean Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, HydroGraph Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G6 Materials and HydroGraph Clean

The main advantage of trading using opposite G6 Materials and HydroGraph Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G6 Materials position performs unexpectedly, HydroGraph Clean 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 HydroGraph Clean will offset losses from the drop in HydroGraph Clean's long position.

The idea behind G6 Materials Corp and HydroGraph Clean Power 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.