Correlation Between Graphjet Technology and Lanxess AG

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

By analyzing existing cross correlation between Graphjet Technology and Lanxess AG, you can compare the effects of market volatilities on Graphjet Technology and Lanxess AG 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 Lanxess AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphjet Technology and Lanxess AG.

Diversification Opportunities for Graphjet Technology and Lanxess AG

0.63

Correlation Coefficient

Graphjet Technology  Lanxess AG

Poor diversification

The 3 months correlation between Graphjet and Lanxess is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Graphjet Technology and Lanxess AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lanxess AG 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 Lanxess AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lanxess AG has no effect on the direction of Graphjet Technology i.e., Graphjet Technology and Lanxess AG go up and down completely randomly.

Pair Corralation between Graphjet Technology and Lanxess AG

Considering the 90-day investment horizon Graphjet Technology is expected to generate 23.65 times more return on investment than Lanxess AG. However, Graphjet Technology is 23.65 times more volatile than Lanxess AG. It trades about 0.08 of its potential returns per unit of risk. Lanxess AG is currently generating about -0.28 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	Significant
Accuracy	100.0%
Values	Daily Returns

Graphjet Technology  vs.  Lanxess AG

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.

Lanxess AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lanxess AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Graphjet Technology and Lanxess AG

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

The idea behind Graphjet Technology and Lanxess AG 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..