Correlation Between Graphene Solar and EnQuest PLC

Can any of the company-specific risk be diversified away by investing in both Graphene Solar and EnQuest PLC 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 Graphene Solar and EnQuest PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graphene Solar Technologies and EnQuest PLC, you can compare the effects of market volatilities on Graphene Solar and EnQuest PLC 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 Graphene Solar with a short position of EnQuest PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Solar and EnQuest PLC.

Diversification Opportunities for Graphene Solar and EnQuest PLC

-0.45

Correlation Coefficient

Graphene Solar  EnQuest PLC

Very good diversification

The 3 months correlation between Graphene and EnQuest is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Solar Technologies and EnQuest PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnQuest PLC and Graphene Solar 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 Graphene Solar Technologies are associated (or correlated) with EnQuest PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnQuest PLC has no effect on the direction of Graphene Solar i.e., Graphene Solar and EnQuest PLC go up and down completely randomly.

Pair Corralation between Graphene Solar and EnQuest PLC

Given the investment horizon of 90 days Graphene Solar Technologies is expected to generate 36.41 times more return on investment than EnQuest PLC. However, Graphene Solar is 36.41 times more volatile than EnQuest PLC. It trades about 0.14 of its potential returns per unit of risk. EnQuest PLC is currently generating about -0.04 per unit of risk. If you would invest  0.71  in Graphene Solar Technologies on September 3, 2024 and sell it today you would lose (0.16) from holding Graphene Solar Technologies or give up 22.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Graphene Solar Technologies  vs.  EnQuest PLC

Graphene Solar Techn

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Solar Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Graphene Solar showed solid returns over the last few months and may actually be approaching a breakup point.

EnQuest PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnQuest PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Graphene Solar and EnQuest PLC

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

The idea behind Graphene Solar Technologies and EnQuest PLC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.