Correlation Between Graphene Solar and Silk Road

Can any of the company-specific risk be diversified away by investing in both Graphene Solar and Silk Road 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 Silk Road 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 Silk Road Medical, you can compare the effects of market volatilities on Graphene Solar and Silk Road 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 Silk Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphene Solar and Silk Road.

Diversification Opportunities for Graphene Solar and Silk Road

0.7

Correlation Coefficient

Graphene Solar  Silk Road

Poor diversification

The 3 months correlation between Graphene and Silk is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Graphene Solar Technologies and Silk Road Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silk Road Medical 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 Silk Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silk Road Medical has no effect on the direction of Graphene Solar i.e., Graphene Solar and Silk Road go up and down completely randomly.

Pair Corralation between Graphene Solar and Silk Road

Given the investment horizon of 90 days Graphene Solar Technologies is expected to generate 27.15 times more return on investment than Silk Road. However, Graphene Solar is 27.15 times more volatile than Silk Road Medical. It trades about 0.14 of its potential returns per unit of risk. Silk Road Medical is currently generating about 0.17 per unit of risk. If you would invest  0.74  in Graphene Solar Technologies on October 5, 2024 and sell it today you would earn a total of  1.08  from holding Graphene Solar Technologies or generate 145.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.56%
Values	Daily Returns

Graphene Solar Technologies  vs.  Silk Road Medical

Graphene Solar Techn

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Solar Technologies are ranked lower than 18 (%) 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.

Silk Road Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Silk Road Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Silk Road is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Graphene Solar and Silk Road

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

The idea behind Graphene Solar Technologies and Silk Road Medical 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.