Correlation Between Haydale Graphene and Asahi Kaisei

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

By analyzing existing cross correlation between Haydale Graphene Industries and Asahi Kaisei Corp, you can compare the effects of market volatilities on Haydale Graphene and Asahi Kaisei 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 Haydale Graphene with a short position of Asahi Kaisei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haydale Graphene and Asahi Kaisei.

Diversification Opportunities for Haydale Graphene and Asahi Kaisei

0.21

Correlation Coefficient

Haydale Graphene  Asahi Kaisei

Modest diversification

The 3 months correlation between Haydale and Asahi is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Haydale Graphene Industries and Asahi Kaisei Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Kaisei Corp and Haydale Graphene 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 Haydale Graphene Industries are associated (or correlated) with Asahi Kaisei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Kaisei Corp has no effect on the direction of Haydale Graphene i.e., Haydale Graphene and Asahi Kaisei go up and down completely randomly.

Pair Corralation between Haydale Graphene and Asahi Kaisei

Assuming the 90 days horizon Haydale Graphene Industries is expected to generate 16.74 times more return on investment than Asahi Kaisei. However, Haydale Graphene is 16.74 times more volatile than Asahi Kaisei Corp. It trades about 0.07 of its potential returns per unit of risk. Asahi Kaisei Corp is currently generating about -0.03 per unit of risk. If you would invest  0.41  in Haydale Graphene Industries on September 12, 2024 and sell it today you would lose (0.21) from holding Haydale Graphene Industries or give up 51.22% of portfolio value over 90 days.

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

Haydale Graphene Industries  vs.  Asahi Kaisei Corp

Haydale Graphene Ind

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haydale Graphene Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical indicators, Haydale Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Asahi Kaisei Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Kaisei Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Asahi Kaisei is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Haydale Graphene and Asahi Kaisei

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

The idea behind Haydale Graphene Industries and Asahi Kaisei Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.