Correlation Between Black Swan and Ganfeng Lithium

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

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

Diversification Opportunities for Black Swan and Ganfeng Lithium

0.06

Correlation Coefficient

Black Swan  Ganfeng Lithium

Significant diversification

The 3 months correlation between Black and Ganfeng is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Black Swan Graphene and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium and Black Swan 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 Black Swan Graphene are associated (or correlated) with Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Black Swan i.e., Black Swan and Ganfeng Lithium go up and down completely randomly.

Pair Corralation between Black Swan and Ganfeng Lithium

Assuming the 90 days horizon Black Swan Graphene is expected to generate 1.51 times more return on investment than Ganfeng Lithium. However, Black Swan is 1.51 times more volatile than Ganfeng Lithium Co. It trades about 0.03 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about -0.01 per unit of risk. If you would invest  6.35  in Black Swan Graphene on October 9, 2024 and sell it today you would earn a total of  0.05  from holding Black Swan Graphene or generate 0.79% return on investment over 90 days.

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

Black Swan Graphene  vs.  Ganfeng Lithium Co

Black Swan Graphene

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Black Swan Graphene are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Black Swan reported solid returns over the last few months and may actually be approaching a breakup point.

Ganfeng Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ganfeng Lithium Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ganfeng Lithium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Black Swan and Ganfeng Lithium

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

The idea behind Black Swan Graphene and Ganfeng Lithium Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.