Correlation Between Graphene Manufacturing and Neo Battery

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

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

Diversification Opportunities for Graphene Manufacturing and Neo Battery

-0.44

Correlation Coefficient

Graphene Manufacturing  Neo Battery

Very good diversification

The 3 months correlation between Graphene and Neo is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Manufacturing Group and Neo Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Battery Materials and Graphene Manufacturing 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 Graphene Manufacturing Group are associated (or correlated) with Neo Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Battery Materials has no effect on the direction of Graphene Manufacturing i.e., Graphene Manufacturing and Neo Battery go up and down completely randomly.

Pair Corralation between Graphene Manufacturing and Neo Battery

Assuming the 90 days horizon Graphene Manufacturing Group is expected to under-perform the Neo Battery. But the stock apears to be less risky and, when comparing its historical volatility, Graphene Manufacturing Group is 3.26 times less risky than Neo Battery. The stock trades about 0.0 of its potential returns per unit of risk. The Neo Battery Materials is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  11.00  in Neo Battery Materials on September 5, 2024 and sell it today you would earn a total of  70.00  from holding Neo Battery Materials or generate 636.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Graphene Manufacturing Group  vs.  Neo Battery Materials

Graphene Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphene Manufacturing Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Graphene Manufacturing is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Neo Battery Materials

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Battery Materials are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Neo Battery showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphene Manufacturing and Neo Battery

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

The idea behind Graphene Manufacturing Group and Neo Battery Materials 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.