Correlation Between Photronics and Graphene Solar

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

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

Diversification Opportunities for Photronics and Graphene Solar

-0.29

Correlation Coefficient

Photronics  Graphene Solar

Very good diversification

The 3 months correlation between Photronics and Graphene is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Photronics and Graphene Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Solar Techn and Photronics 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 Photronics are associated (or correlated) with Graphene Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphene Solar Techn has no effect on the direction of Photronics i.e., Photronics and Graphene Solar go up and down completely randomly.

Pair Corralation between Photronics and Graphene Solar

Given the investment horizon of 90 days Photronics is expected to under-perform the Graphene Solar. But the stock apears to be less risky and, when comparing its historical volatility, Photronics is 72.86 times less risky than Graphene Solar. The stock trades about -0.01 of its potential returns per unit of risk. The Graphene Solar Technologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.71  in Graphene Solar Technologies on September 26, 2024 and sell it today you would earn a total of  1.99  from holding Graphene Solar Technologies or generate 280.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Photronics  vs.  Graphene Solar Technologies

Photronics

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Photronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Photronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Graphene Solar Techn

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Solar Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Graphene Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Photronics and Graphene Solar

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

The idea behind Photronics and Graphene Solar Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.