Correlation Between Neo Battery and Graphene Manufacturing

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

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

Diversification Opportunities for Neo Battery and Graphene Manufacturing

0.33

Correlation Coefficient

Neo Battery  Graphene Manufacturing

Weak diversification

The 3 months correlation between Neo and Graphene is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and Graphene Manufacturing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphene Manufacturing and Neo Battery 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 Neo Battery Materials 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 Neo Battery i.e., Neo Battery and Graphene Manufacturing go up and down completely randomly.

Pair Corralation between Neo Battery and Graphene Manufacturing

Assuming the 90 days horizon Neo Battery Materials is expected to under-perform the Graphene Manufacturing. In addition to that, Neo Battery is 1.71 times more volatile than Graphene Manufacturing Group. It trades about 0.0 of its total potential returns per unit of risk. Graphene Manufacturing Group is currently generating about 0.16 per unit of volatility. If you would invest  59.00  in Graphene Manufacturing Group on December 2, 2024 and sell it today you would earn a total of  35.00  from holding Graphene Manufacturing Group or generate 59.32% return on investment over 90 days.

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

Neo Battery Materials  vs.  Graphene Manufacturing Group

Neo Battery Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neo Battery Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Neo Battery is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Graphene Manufacturing

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Graphene Manufacturing Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Graphene Manufacturing showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neo Battery and Graphene Manufacturing

The main advantage of trading using opposite Neo Battery and Graphene Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Battery 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 Neo Battery Materials 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..