Correlation Between Frontier Group and Graphjet Technology

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

By analyzing existing cross correlation between Frontier Group Holdings and Graphjet Technology, you can compare the effects of market volatilities on Frontier Group and Graphjet Technology 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 Frontier Group with a short position of Graphjet Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontier Group and Graphjet Technology.

Diversification Opportunities for Frontier Group and Graphjet Technology

-0.7

Correlation Coefficient

Frontier Group  Graphjet Technology

Excellent diversification

The 3 months correlation between Frontier and Graphjet is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Frontier Group Holdings and Graphjet Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphjet Technology and Frontier Group 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 Frontier Group Holdings are associated (or correlated) with Graphjet Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphjet Technology has no effect on the direction of Frontier Group i.e., Frontier Group and Graphjet Technology go up and down completely randomly.

Pair Corralation between Frontier Group and Graphjet Technology

Given the investment horizon of 90 days Frontier Group is expected to generate 2.19 times less return on investment than Graphjet Technology. But when comparing it to its historical volatility, Frontier Group Holdings is 7.28 times less risky than Graphjet Technology. It trades about 0.11 of its potential returns per unit of risk. Graphjet Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  226.00  in Graphjet Technology on October 22, 2024 and sell it today you would lose (182.00) from holding Graphjet Technology or give up 80.53% of portfolio value over 90 days.

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

Frontier Group Holdings  vs.  Graphjet Technology

Frontier Group Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontier Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Frontier Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Graphjet Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphjet Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Graphjet Technology demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Frontier Group and Graphjet Technology

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

The idea behind Frontier Group Holdings and Graphjet Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.