Correlation Between Versarien Plc and First Graphene

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

By analyzing existing cross correlation between Versarien plc and First Graphene, you can compare the effects of market volatilities on Versarien Plc and First Graphene 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 Versarien Plc with a short position of First Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Versarien Plc and First Graphene.

Diversification Opportunities for Versarien Plc and First Graphene

0.1

Correlation Coefficient

Versarien Plc  First Graphene

Average diversification

The 3 months correlation between Versarien and First is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Versarien plc and First Graphene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Graphene and Versarien Plc 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 Versarien plc are associated (or correlated) with First Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Graphene has no effect on the direction of Versarien Plc i.e., Versarien Plc and First Graphene go up and down completely randomly.

Pair Corralation between Versarien Plc and First Graphene

Assuming the 90 days horizon Versarien Plc is expected to generate 1.48 times less return on investment than First Graphene. In addition to that, Versarien Plc is 1.55 times more volatile than First Graphene. It trades about 0.05 of its total potential returns per unit of risk. First Graphene is currently generating about 0.12 per unit of volatility. If you would invest  2.20  in First Graphene on December 30, 2024 and sell it today you would earn a total of  1.30  from holding First Graphene or generate 59.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Versarien plc  vs.  First Graphene

Versarien plc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Versarien plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Versarien Plc reported solid returns over the last few months and may actually be approaching a breakup point.

First Graphene

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Graphene are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, First Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Versarien Plc and First Graphene

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

The idea behind Versarien plc and First Graphene 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.