Correlation Between G6 Materials and Black Swan

Can any of the company-specific risk be diversified away by investing in both G6 Materials and Black Swan 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 G6 Materials and Black Swan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between G6 Materials Corp and Black Swan Graphene, you can compare the effects of market volatilities on G6 Materials and Black Swan 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 G6 Materials with a short position of Black Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of G6 Materials and Black Swan.

Diversification Opportunities for G6 Materials and Black Swan

0.37

Correlation Coefficient

G6 Materials  Black Swan

Weak diversification

The 3 months correlation between GPHBF and Black is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding G6 Materials Corp and Black Swan Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Swan Graphene and G6 Materials 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 G6 Materials Corp are associated (or correlated) with Black Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Swan Graphene has no effect on the direction of G6 Materials i.e., G6 Materials and Black Swan go up and down completely randomly.

Pair Corralation between G6 Materials and Black Swan

Assuming the 90 days horizon G6 Materials is expected to generate 3.57 times less return on investment than Black Swan. But when comparing it to its historical volatility, G6 Materials Corp is 6.12 times less risky than Black Swan. It trades about 0.21 of its potential returns per unit of risk. Black Swan Graphene is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Black Swan Graphene on December 20, 2024 and sell it today you would earn a total of  17.00  from holding Black Swan Graphene or generate 36.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

G6 Materials Corp  vs.  Black Swan Graphene

G6 Materials Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in G6 Materials Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental drivers, G6 Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Black Swan Graphene

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Swan Graphene are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Black Swan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with G6 Materials and Black Swan

The main advantage of trading using opposite G6 Materials and Black Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G6 Materials position performs unexpectedly, Black Swan 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 Black Swan will offset losses from the drop in Black Swan's long position.

The idea behind G6 Materials Corp and Black Swan Graphene 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.