Correlation Between Graphjet Technology and Westrock Coffee

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

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

Diversification Opportunities for Graphjet Technology and Westrock Coffee

0.68

Correlation Coefficient

Graphjet Technology  Westrock Coffee

Poor diversification

The 3 months correlation between Graphjet and Westrock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Graphjet Technology and Westrock Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westrock Coffee 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 Westrock Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westrock Coffee has no effect on the direction of Graphjet Technology i.e., Graphjet Technology and Westrock Coffee go up and down completely randomly.

Pair Corralation between Graphjet Technology and Westrock Coffee

Considering the 90-day investment horizon Graphjet Technology is expected to generate 6.45 times more return on investment than Westrock Coffee. However, Graphjet Technology is 6.45 times more volatile than Westrock Coffee. It trades about 0.0 of its potential returns per unit of risk. Westrock Coffee is currently generating about -0.04 per unit of risk. If you would invest  1,047  in Graphjet Technology on October 25, 2024 and sell it today you would lose (1,014) from holding Graphjet Technology or give up 96.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.91%
Values	Daily Returns

Graphjet Technology  vs.  Westrock Coffee

Graphjet Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphjet Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Graphjet Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Westrock Coffee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Westrock Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Westrock Coffee is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Graphjet Technology and Westrock Coffee

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

The idea behind Graphjet Technology and Westrock Coffee 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.