Correlation Between CO2 Energy and Graf Global

Can any of the company-specific risk be diversified away by investing in both CO2 Energy and Graf Global 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 CO2 Energy and Graf Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CO2 Energy Transition and Graf Global Corp, you can compare the effects of market volatilities on CO2 Energy and Graf Global 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 CO2 Energy with a short position of Graf Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of CO2 Energy and Graf Global.

Diversification Opportunities for CO2 Energy and Graf Global

0.17

Correlation Coefficient

CO2 Energy  Graf Global

Average diversification

The 3 months correlation between CO2 and Graf is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CO2 Energy Transition and Graf Global Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graf Global Corp and CO2 Energy 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 CO2 Energy Transition are associated (or correlated) with Graf Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graf Global Corp has no effect on the direction of CO2 Energy i.e., CO2 Energy and Graf Global go up and down completely randomly.

Pair Corralation between CO2 Energy and Graf Global

Assuming the 90 days horizon CO2 Energy is expected to generate 2.51 times less return on investment than Graf Global. But when comparing it to its historical volatility, CO2 Energy Transition is 3.57 times less risky than Graf Global. It trades about 0.11 of its potential returns per unit of risk. Graf Global Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,002  in Graf Global Corp on September 17, 2024 and sell it today you would earn a total of  6.30  from holding Graf Global Corp or generate 0.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	39.53%
Values	Daily Returns

CO2 Energy Transition  vs.  Graf Global Corp

CO2 Energy Transition

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CO2 Energy Transition are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, CO2 Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Graf Global Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Graf Global Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Graf Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CO2 Energy and Graf Global

The main advantage of trading using opposite CO2 Energy and Graf Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CO2 Energy position performs unexpectedly, Graf Global 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 Graf Global will offset losses from the drop in Graf Global's long position.

The idea behind CO2 Energy Transition and Graf Global Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.