Correlation Between GrafTech International and Gateway Real

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

By analyzing existing cross correlation between GrafTech International and Gateway Real Estate, you can compare the effects of market volatilities on GrafTech International and Gateway Real 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 Gateway Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrafTech International and Gateway Real.

Diversification Opportunities for GrafTech International and Gateway Real

-0.6

Correlation Coefficient

GrafTech International  Gateway Real

Excellent diversification

The 3 months correlation between GrafTech and Gateway is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Gateway Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gateway Real Estate 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 Gateway Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gateway Real Estate has no effect on the direction of GrafTech International i.e., GrafTech International and Gateway Real go up and down completely randomly.

Pair Corralation between GrafTech International and Gateway Real

Assuming the 90 days horizon GrafTech International is expected to generate 0.83 times more return on investment than Gateway Real. However, GrafTech International is 1.2 times less risky than Gateway Real. It trades about -0.16 of its potential returns per unit of risk. Gateway Real Estate is currently generating about -0.2 per unit of risk. If you would invest  194.00  in GrafTech International on September 23, 2024 and sell it today you would lose (39.00) from holding GrafTech International or give up 20.1% of portfolio value over 90 days.

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

GrafTech International  vs.  Gateway Real Estate

GrafTech International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GrafTech International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GrafTech International reported solid returns over the last few months and may actually be approaching a breakup point.

Gateway Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gateway Real Estate 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with GrafTech International and Gateway Real

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

The idea behind GrafTech International and Gateway Real Estate 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.