Correlation Between Grocery Outlet and Graphjet Technology

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

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

Diversification Opportunities for Grocery Outlet and Graphjet Technology

0.53

Correlation Coefficient

Grocery Outlet  Graphjet Technology

Very weak diversification

The 3 months correlation between Grocery and Graphjet is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Grocery Outlet Holding and Graphjet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphjet Technology and Grocery Outlet 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 Grocery Outlet Holding 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 Grocery Outlet i.e., Grocery Outlet and Graphjet Technology go up and down completely randomly.

Pair Corralation between Grocery Outlet and Graphjet Technology

Allowing for the 90-day total investment horizon Grocery Outlet Holding is expected to under-perform the Graphjet Technology. But the stock apears to be less risky and, when comparing its historical volatility, Grocery Outlet Holding is 6.77 times less risky than Graphjet Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Graphjet Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Graphjet Technology on December 20, 2024 and sell it today you would lose (13.11) from holding Graphjet Technology or give up 57.0% of portfolio value over 90 days.

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

Grocery Outlet Holding  vs.  Graphjet Technology

Grocery Outlet Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grocery Outlet Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Graphjet Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graphjet Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Graphjet Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grocery Outlet and Graphjet Technology

The main advantage of trading using opposite Grocery Outlet and Graphjet Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grocery Outlet 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 Grocery Outlet Holding 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.