Correlation Between Graphene Manufacturing and Iofina Plc

Can any of the company-specific risk be diversified away by investing in both Graphene Manufacturing and Iofina Plc 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 Iofina Plc 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 Iofina plc, you can compare the effects of market volatilities on Graphene Manufacturing and Iofina Plc 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 Iofina Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Manufacturing and Iofina Plc.

Diversification Opportunities for Graphene Manufacturing and Iofina Plc

0.51

Correlation Coefficient

Graphene Manufacturing  Iofina Plc

Very weak diversification

The 3 months correlation between Graphene and Iofina is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Manufacturing Group and Iofina plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iofina plc 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 Iofina Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iofina plc has no effect on the direction of Graphene Manufacturing i.e., Graphene Manufacturing and Iofina Plc go up and down completely randomly.

Pair Corralation between Graphene Manufacturing and Iofina Plc

Assuming the 90 days horizon Graphene Manufacturing is expected to generate 2.21 times less return on investment than Iofina Plc. In addition to that, Graphene Manufacturing is 1.03 times more volatile than Iofina plc. It trades about 0.04 of its total potential returns per unit of risk. Iofina plc is currently generating about 0.1 per unit of volatility. If you would invest  23.00  in Iofina plc on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Iofina plc or generate 30.43% return on investment over 90 days.

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

Graphene Manufacturing Group  vs.  Iofina plc

Graphene Manufacturing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Manufacturing Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Graphene Manufacturing reported solid returns over the last few months and may actually be approaching a breakup point.

Iofina plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iofina plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Iofina Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphene Manufacturing and Iofina Plc

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

The idea behind Graphene Manufacturing Group and Iofina plc 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.