Correlation Between Graphjet Technology and Starbucks

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

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

Diversification Opportunities for Graphjet Technology and Starbucks

-0.39

Correlation Coefficient

Graphjet Technology  Starbucks

Very good diversification

The 3 months correlation between Graphjet and Starbucks is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Graphjet Technology and Starbucks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starbucks 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 Starbucks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starbucks has no effect on the direction of Graphjet Technology i.e., Graphjet Technology and Starbucks go up and down completely randomly.

Pair Corralation between Graphjet Technology and Starbucks

Considering the 90-day investment horizon Graphjet Technology is expected to under-perform the Starbucks. In addition to that, Graphjet Technology is 5.5 times more volatile than Starbucks. It trades about -0.35 of its total potential returns per unit of risk. Starbucks is currently generating about 0.09 per unit of volatility. If you would invest  9,009  in Starbucks on December 29, 2024 and sell it today you would earn a total of  876.00  from holding Starbucks or generate 9.72% return on investment over 90 days.

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

Graphjet Technology  vs.  Starbucks

Graphjet Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graphjet Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Starbucks

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Starbucks are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Starbucks may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Graphjet Technology and Starbucks

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

The idea behind Graphjet Technology and Starbucks 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.