Correlation Between Falken Industries and G6 Materials

Can any of the company-specific risk be diversified away by investing in both Falken Industries and G6 Materials 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 Falken Industries and G6 Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Falken Industries and G6 Materials Corp, you can compare the effects of market volatilities on Falken Industries and G6 Materials 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 Falken Industries with a short position of G6 Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Falken Industries and G6 Materials.

Diversification Opportunities for Falken Industries and G6 Materials

0.0

Correlation Coefficient

Falken Industries  G6 Materials

Pay attention - limited upside

The 3 months correlation between Falken and GPHBF is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Falken Industries and G6 Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G6 Materials Corp and Falken Industries 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 Falken Industries are associated (or correlated) with G6 Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G6 Materials Corp has no effect on the direction of Falken Industries i.e., Falken Industries and G6 Materials go up and down completely randomly.

Pair Corralation between Falken Industries and G6 Materials

If you would invest  2.80  in G6 Materials Corp on October 12, 2024 and sell it today you would earn a total of  0.20  from holding G6 Materials Corp or generate 7.14% return on investment over 90 days.

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

Falken Industries  vs.  G6 Materials Corp

Falken Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falken Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Falken Industries is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

G6 Materials Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in G6 Materials Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, G6 Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Falken Industries and G6 Materials

The main advantage of trading using opposite Falken Industries and G6 Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Falken Industries position performs unexpectedly, G6 Materials 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 G6 Materials will offset losses from the drop in G6 Materials' long position.

The idea behind Falken Industries and G6 Materials Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.