Correlation Between Macmahon Holdings and Graphene Solar

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

By analyzing existing cross correlation between Macmahon Holdings Limited and Graphene Solar Technologies, you can compare the effects of market volatilities on Macmahon Holdings and Graphene Solar 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 Macmahon Holdings with a short position of Graphene Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Macmahon Holdings and Graphene Solar.

Diversification Opportunities for Macmahon Holdings and Graphene Solar

-0.71

Correlation Coefficient

Macmahon Holdings  Graphene Solar

Pay attention - limited upside

The 3 months correlation between Macmahon and Graphene is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Macmahon Holdings Limited and Graphene Solar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Solar Techn and Macmahon Holdings 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 Macmahon Holdings Limited are associated (or correlated) with Graphene Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphene Solar Techn has no effect on the direction of Macmahon Holdings i.e., Macmahon Holdings and Graphene Solar go up and down completely randomly.

Pair Corralation between Macmahon Holdings and Graphene Solar

Assuming the 90 days horizon Macmahon Holdings Limited is expected to under-perform the Graphene Solar. But the pink sheet apears to be less risky and, when comparing its historical volatility, Macmahon Holdings Limited is 42.1 times less risky than Graphene Solar. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Graphene Solar Technologies is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  0.57  in Graphene Solar Technologies on October 8, 2024 and sell it today you would earn a total of  1.25  from holding Graphene Solar Technologies or generate 219.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Macmahon Holdings Limited  vs.  Graphene Solar Technologies

Macmahon Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macmahon Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Graphene Solar Techn

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Solar Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Graphene Solar showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macmahon Holdings and Graphene Solar

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

The idea behind Macmahon Holdings Limited and Graphene Solar Technologies 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.