Correlation Between International Flavors and Graphene Manufacturing

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

By analyzing existing cross correlation between International Flavors Fragrances and Graphene Manufacturing Group, you can compare the effects of market volatilities on International Flavors and Graphene Manufacturing 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 International Flavors with a short position of Graphene Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Graphene Manufacturing.

Diversification Opportunities for International Flavors and Graphene Manufacturing

0.69

Correlation Coefficient

International Flavors  Graphene Manufacturing

Poor diversification

The 3 months correlation between International and Graphene is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Graphene Manufacturing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Manufacturing and International Flavors 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 International Flavors Fragrances are associated (or correlated) with Graphene Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphene Manufacturing has no effect on the direction of International Flavors i.e., International Flavors and Graphene Manufacturing go up and down completely randomly.

Pair Corralation between International Flavors and Graphene Manufacturing

Considering the 90-day investment horizon International Flavors Fragrances is expected to under-perform the Graphene Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, International Flavors Fragrances is 2.46 times less risky than Graphene Manufacturing. The stock trades about -0.12 of its potential returns per unit of risk. The Graphene Manufacturing Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  47.00  in Graphene Manufacturing Group on September 12, 2024 and sell it today you would lose (4.00) from holding Graphene Manufacturing Group or give up 8.51% of portfolio value over 90 days.

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

International Flavors Fragranc  vs.  Graphene Manufacturing Group

International Flavors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Flavors Fragrances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Graphene Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphene Manufacturing Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Graphene Manufacturing is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with International Flavors and Graphene Manufacturing

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

The idea behind International Flavors Fragrances and Graphene Manufacturing Group 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 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.