Correlation Between First Graphene and AdvanSix

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

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

Diversification Opportunities for First Graphene and AdvanSix

0.42

Correlation Coefficient

First Graphene  AdvanSix

Very weak diversification

The 3 months correlation between First and AdvanSix is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and AdvanSix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanSix and First 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 First Graphene are associated (or correlated) with AdvanSix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanSix has no effect on the direction of First Graphene i.e., First Graphene and AdvanSix go up and down completely randomly.

Pair Corralation between First Graphene and AdvanSix

Assuming the 90 days horizon First Graphene is expected to generate 4.82 times more return on investment than AdvanSix. However, First Graphene is 4.82 times more volatile than AdvanSix. It trades about 0.12 of its potential returns per unit of risk. AdvanSix is currently generating about -0.14 per unit of risk. If you would invest  2.20  in First Graphene on December 29, 2024 and sell it today you would earn a total of  1.30  from holding First Graphene or generate 59.09% return on investment over 90 days.

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

First Graphene  vs.  AdvanSix

First Graphene

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Graphene are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, First Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

AdvanSix

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvanSix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with First Graphene and AdvanSix

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

The idea behind First Graphene and AdvanSix 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.