Correlation Between Haydale Graphene and Olin

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

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

Diversification Opportunities for Haydale Graphene and Olin

0.55

Correlation Coefficient

Haydale Graphene  Olin

Very weak diversification

The 3 months correlation between Haydale and Olin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Haydale Graphene Industries and Olin Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Olin and Haydale Graphene 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 Haydale Graphene Industries are associated (or correlated) with Olin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Olin has no effect on the direction of Haydale Graphene i.e., Haydale Graphene and Olin go up and down completely randomly.

Pair Corralation between Haydale Graphene and Olin

Assuming the 90 days horizon Haydale Graphene Industries is expected to generate 11.1 times more return on investment than Olin. However, Haydale Graphene is 11.1 times more volatile than Olin Corporation. It trades about 0.08 of its potential returns per unit of risk. Olin Corporation is currently generating about 0.02 per unit of risk. If you would invest  0.39  in Haydale Graphene Industries on September 5, 2024 and sell it today you would lose (0.13) from holding Haydale Graphene Industries or give up 33.33% of portfolio value over 90 days.

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

Haydale Graphene Industries  vs.  Olin Corp.

Haydale Graphene Ind

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haydale Graphene Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical indicators, Haydale Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Olin

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Olin Corporation are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy essential indicators, Olin is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Haydale Graphene and Olin

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

The idea behind Haydale Graphene Industries and Olin Corporation 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 Stocks Directory module to find actively traded stocks across global markets.