Correlation Between Graphjet Technology and Henderson Investment

Can any of the company-specific risk be diversified away by investing in both Graphjet Technology and Henderson Investment 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 Graphjet Technology and Henderson Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Graphjet Technology and Henderson Investment Ltd, you can compare the effects of market volatilities on Graphjet Technology and Henderson Investment 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 Graphjet Technology with a short position of Henderson Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphjet Technology and Henderson Investment.

Diversification Opportunities for Graphjet Technology and Henderson Investment

0.8

Correlation Coefficient

Graphjet Technology  Henderson Investment

Very poor diversification

The 3 months correlation between Graphjet and Henderson is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Graphjet Technology and Henderson Investment Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henderson Investment and Graphjet Technology 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 Graphjet Technology are associated (or correlated) with Henderson Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henderson Investment has no effect on the direction of Graphjet Technology i.e., Graphjet Technology and Henderson Investment go up and down completely randomly.

Pair Corralation between Graphjet Technology and Henderson Investment

Considering the 90-day investment horizon Graphjet Technology is expected to generate 4.12 times more return on investment than Henderson Investment. However, Graphjet Technology is 4.12 times more volatile than Henderson Investment Ltd. It trades about 0.08 of its potential returns per unit of risk. Henderson Investment Ltd is currently generating about -0.22 per unit of risk. If you would invest  276.00  in Graphjet Technology on October 6, 2024 and sell it today you would lose (187.00) from holding Graphjet Technology or give up 67.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Graphjet Technology  vs.  Henderson Investment Ltd

Graphjet Technology

Risk-Adjusted Performance

4 of 100

Insignificant

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

Henderson Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Henderson Investment Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Graphjet Technology and Henderson Investment

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

The idea behind Graphjet Technology and Henderson Investment Ltd 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.