Correlation Between Graphjet Technology and Primo Brands

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

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

Diversification Opportunities for Graphjet Technology and Primo Brands

-0.63

Correlation Coefficient

Graphjet Technology  Primo Brands

Excellent diversification

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

Pair Corralation between Graphjet Technology and Primo Brands

Considering the 90-day investment horizon Graphjet Technology is expected to generate 1.68 times less return on investment than Primo Brands. In addition to that, Graphjet Technology is 10.03 times more volatile than Primo Brands. It trades about 0.01 of its total potential returns per unit of risk. Primo Brands is currently generating about 0.11 per unit of volatility. If you would invest  1,374  in Primo Brands on October 10, 2024 and sell it today you would earn a total of  1,795  from holding Primo Brands or generate 130.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	75.15%
Values	Daily Returns

Graphjet Technology  vs.  Primo Brands

Graphjet Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphjet Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Graphjet Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Primo Brands

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphjet Technology and Primo Brands

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

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