Correlation Between HydroGraph Clean and 5E Advanced

Can any of the company-specific risk be diversified away by investing in both HydroGraph Clean and 5E Advanced 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 HydroGraph Clean and 5E Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HydroGraph Clean Power and 5E Advanced Materials, you can compare the effects of market volatilities on HydroGraph Clean and 5E Advanced 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 HydroGraph Clean with a short position of 5E Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of HydroGraph Clean and 5E Advanced.

Diversification Opportunities for HydroGraph Clean and 5E Advanced

0.2

Correlation Coefficient

HydroGraph Clean  5E Advanced

Modest diversification

The 3 months correlation between HydroGraph and FEAM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding HydroGraph Clean Power and 5E Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 5E Advanced Materials and HydroGraph Clean 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 HydroGraph Clean Power are associated (or correlated) with 5E Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 5E Advanced Materials has no effect on the direction of HydroGraph Clean i.e., HydroGraph Clean and 5E Advanced go up and down completely randomly.

Pair Corralation between HydroGraph Clean and 5E Advanced

Assuming the 90 days horizon HydroGraph Clean Power is expected to generate 1.18 times more return on investment than 5E Advanced. However, HydroGraph Clean is 1.18 times more volatile than 5E Advanced Materials. It trades about 0.07 of its potential returns per unit of risk. 5E Advanced Materials is currently generating about -0.07 per unit of risk. If you would invest  9.15  in HydroGraph Clean Power on September 4, 2024 and sell it today you would earn a total of  0.85  from holding HydroGraph Clean Power or generate 9.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.56%
Values	Daily Returns

HydroGraph Clean Power  vs.  5E Advanced Materials

HydroGraph Clean Power

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days HydroGraph Clean Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, HydroGraph Clean reported solid returns over the last few months and may actually be approaching a breakup point.

5E Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 5E Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with HydroGraph Clean and 5E Advanced

The main advantage of trading using opposite HydroGraph Clean and 5E Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HydroGraph Clean position performs unexpectedly, 5E Advanced 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 5E Advanced will offset losses from the drop in 5E Advanced's long position.

The idea behind HydroGraph Clean Power and 5E Advanced Materials 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .