Correlation Between Graphex Group and Ceylon Graphite

Can any of the company-specific risk be diversified away by investing in both Graphex Group and Ceylon Graphite 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 Ceylon Graphite 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 Ceylon Graphite Corp, you can compare the effects of market volatilities on Graphex Group and Ceylon Graphite 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 Ceylon Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphex Group and Ceylon Graphite.

Diversification Opportunities for Graphex Group and Ceylon Graphite

-0.52

Correlation Coefficient

Graphex Group  Ceylon Graphite

Excellent diversification

The 3 months correlation between Graphex and Ceylon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Graphex Group Limited and Ceylon Graphite Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceylon Graphite Corp 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 Ceylon Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceylon Graphite Corp has no effect on the direction of Graphex Group i.e., Graphex Group and Ceylon Graphite go up and down completely randomly.

Pair Corralation between Graphex Group and Ceylon Graphite

Given the investment horizon of 90 days Graphex Group is expected to generate 1.29 times less return on investment than Ceylon Graphite. But when comparing it to its historical volatility, Graphex Group Limited is 1.4 times less risky than Ceylon Graphite. It trades about 0.07 of its potential returns per unit of risk. Ceylon Graphite Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.27  in Ceylon Graphite Corp on December 1, 2024 and sell it today you would lose (0.42) from holding Ceylon Graphite Corp or give up 33.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.77%
Values	Daily Returns

Graphex Group Limited  vs.  Ceylon Graphite Corp

Graphex Group Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graphex Group Limited are ranked lower than 5 (%) 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.

Ceylon Graphite Corp

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Graphex Group and Ceylon Graphite

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

The idea behind Graphex Group Limited and Ceylon Graphite Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.