Correlation Between Lynas Rare and Graphex Group

Can any of the company-specific risk be diversified away by investing in both Lynas Rare and Graphex Group 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 Lynas Rare and Graphex Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lynas Rare Earths and Graphex Group Limited, you can compare the effects of market volatilities on Lynas Rare and Graphex Group 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 Lynas Rare with a short position of Graphex Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lynas Rare and Graphex Group.

Diversification Opportunities for Lynas Rare and Graphex Group

0.4

Correlation Coefficient

Lynas Rare  Graphex Group

Very weak diversification

The 3 months correlation between Lynas and Graphex is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Lynas Rare Earths and Graphex Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphex Group Limited and Lynas Rare 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 Lynas Rare Earths are associated (or correlated) with Graphex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphex Group Limited has no effect on the direction of Lynas Rare i.e., Lynas Rare and Graphex Group go up and down completely randomly.

Pair Corralation between Lynas Rare and Graphex Group

Assuming the 90 days horizon Lynas Rare Earths is expected to under-perform the Graphex Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lynas Rare Earths is 4.46 times less risky than Graphex Group. The pink sheet trades about 0.0 of its potential returns per unit of risk. The Graphex Group Limited is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Graphex Group Limited on September 3, 2024 and sell it today you would lose (2.00) from holding Graphex Group Limited or give up 9.09% of portfolio value over 90 days.

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

Lynas Rare Earths  vs.  Graphex Group Limited

Lynas Rare Earths

Risk-Adjusted Performance

0 of 100

Very Weak

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

Graphex Group Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphex Group Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Graphex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lynas Rare and Graphex Group

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

The idea behind Lynas Rare Earths and Graphex Group Limited 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.