Correlation Between GrafTech International and Asia Pacific

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

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

Diversification Opportunities for GrafTech International and Asia Pacific

-0.1

Correlation Coefficient

GrafTech International  Asia Pacific

Good diversification

The 3 months correlation between GrafTech and Asia is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Asia Pacific Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Wire and GrafTech International 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 GrafTech International are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Wire has no effect on the direction of GrafTech International i.e., GrafTech International and Asia Pacific go up and down completely randomly.

Pair Corralation between GrafTech International and Asia Pacific

Considering the 90-day investment horizon GrafTech International is expected to under-perform the Asia Pacific. In addition to that, GrafTech International is 1.68 times more volatile than Asia Pacific Wire. It trades about -0.11 of its total potential returns per unit of risk. Asia Pacific Wire is currently generating about -0.09 per unit of volatility. If you would invest  194.00  in Asia Pacific Wire on November 29, 2024 and sell it today you would lose (41.00) from holding Asia Pacific Wire or give up 21.13% of portfolio value over 90 days.

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

GrafTech International  vs.  Asia Pacific Wire

GrafTech International

Risk-Adjusted Performance

Very Weak

Over the last 90 days GrafTech International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Asia Pacific Wire

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Pacific Wire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with GrafTech International and Asia Pacific

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

The idea behind GrafTech International and Asia Pacific Wire 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.