Correlation Between Iofina Plc and Graphene Manufacturing

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

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

Diversification Opportunities for Iofina Plc and Graphene Manufacturing

0.51

Correlation Coefficient

Iofina Plc  Graphene Manufacturing

Very weak diversification

The 3 months correlation between Iofina and Graphene is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Iofina plc and Graphene Manufacturing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Manufacturing and Iofina Plc 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 Iofina plc 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 Iofina Plc i.e., Iofina Plc and Graphene Manufacturing go up and down completely randomly.

Pair Corralation between Iofina Plc and Graphene Manufacturing

Assuming the 90 days horizon Iofina plc is expected to generate 0.97 times more return on investment than Graphene Manufacturing. However, Iofina plc is 1.03 times less risky than Graphene Manufacturing. It trades about 0.1 of its potential returns per unit of risk. Graphene Manufacturing Group is currently generating about 0.04 per unit of risk. If you would invest  23.00  in Iofina plc on December 30, 2024 and sell it today you would earn a total of  7.00  from holding Iofina plc or generate 30.43% return on investment over 90 days.

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

Iofina plc  vs.  Graphene Manufacturing Group

Iofina plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Iofina plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Iofina Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Graphene Manufacturing

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Iofina Plc and Graphene Manufacturing

The main advantage of trading using opposite Iofina Plc and Graphene Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iofina Plc 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 Iofina plc 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.