Correlation Between Haydale Graphene and Gevo

Can any of the company-specific risk be diversified away by investing in both Haydale Graphene and Gevo 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 Gevo 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 Gevo Inc, you can compare the effects of market volatilities on Haydale Graphene and Gevo 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 Gevo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haydale Graphene and Gevo.

Diversification Opportunities for Haydale Graphene and Gevo

-0.04

Correlation Coefficient

Haydale Graphene  Gevo

Good diversification

The 3 months correlation between Haydale and Gevo is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Haydale Graphene Industries and Gevo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gevo Inc 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 Gevo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gevo Inc has no effect on the direction of Haydale Graphene i.e., Haydale Graphene and Gevo go up and down completely randomly.

Pair Corralation between Haydale Graphene and Gevo

Assuming the 90 days horizon Haydale Graphene Industries is expected to generate 2.54 times more return on investment than Gevo. However, Haydale Graphene is 2.54 times more volatile than Gevo Inc. It trades about 0.05 of its potential returns per unit of risk. Gevo Inc is currently generating about 0.0 per unit of risk. If you would invest  0.24  in Haydale Graphene Industries on December 1, 2024 and sell it today you would lose (0.08) from holding Haydale Graphene Industries or give up 33.33% of portfolio value over 90 days.

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

Haydale Graphene Industries  vs.  Gevo Inc

Haydale Graphene Ind

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haydale Graphene Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Haydale Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Gevo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gevo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Gevo is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Haydale Graphene and Gevo

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

The idea behind Haydale Graphene Industries and Gevo Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.