Correlation Between Global Net and Graphjet Technology

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

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

Diversification Opportunities for Global Net and Graphjet Technology

0.25

Correlation Coefficient

Global Net  Graphjet Technology

Modest diversification

The 3 months correlation between Global and Graphjet is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Graphjet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphjet Technology and Global Net 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 Global Net Lease are associated (or correlated) with Graphjet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphjet Technology has no effect on the direction of Global Net i.e., Global Net and Graphjet Technology go up and down completely randomly.

Pair Corralation between Global Net and Graphjet Technology

Assuming the 90 days trading horizon Global Net is expected to generate 270.45 times less return on investment than Graphjet Technology. But when comparing it to its historical volatility, Global Net Lease is 41.68 times less risky than Graphjet Technology. It trades about 0.03 of its potential returns per unit of risk. Graphjet Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Graphjet Technology on October 24, 2024 and sell it today you would earn a total of  11.00  from holding Graphjet Technology or generate 47.83% return on investment over 90 days.

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

Global Net Lease  vs.  Graphjet Technology

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Graphjet Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphjet Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Graphjet Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Net and Graphjet Technology

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

The idea behind Global Net Lease and Graphjet Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.