Correlation Between Graphex Group and Compass Minerals

Can any of the company-specific risk be diversified away by investing in both Graphex Group and Compass Minerals 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 Graphex Group and Compass Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graphex Group Limited and Compass Minerals International, you can compare the effects of market volatilities on Graphex Group and Compass Minerals 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 Graphex Group with a short position of Compass Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphex Group and Compass Minerals.

Diversification Opportunities for Graphex Group and Compass Minerals

-0.48

Correlation Coefficient

Graphex Group  Compass Minerals

Very good diversification

The 3 months correlation between Graphex and Compass is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Graphex Group Limited and Compass Minerals International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compass Minerals Int and Graphex Group 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 Graphex Group Limited are associated (or correlated) with Compass Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compass Minerals Int has no effect on the direction of Graphex Group i.e., Graphex Group and Compass Minerals go up and down completely randomly.

Pair Corralation between Graphex Group and Compass Minerals

Given the investment horizon of 90 days Graphex Group Limited is expected to generate 6.79 times more return on investment than Compass Minerals. However, Graphex Group is 6.79 times more volatile than Compass Minerals International. It trades about 0.15 of its potential returns per unit of risk. Compass Minerals International is currently generating about -0.46 per unit of risk. If you would invest  21.00  in Graphex Group Limited on October 3, 2024 and sell it today you would earn a total of  7.00  from holding Graphex Group Limited or generate 33.33% return on investment over 90 days.

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

Graphex Group Limited  vs.  Compass Minerals International

Graphex Group Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphex Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Graphex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Compass Minerals Int

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compass Minerals International has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, Compass Minerals is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Graphex Group and Compass Minerals

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

The idea behind Graphex Group Limited and Compass Minerals International 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.