Correlation Between Graphjet Technology and NVent Electric

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

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

Diversification Opportunities for Graphjet Technology and NVent Electric

-0.71

Correlation Coefficient

Graphjet Technology  NVent Electric

Pay attention - limited upside

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

Pair Corralation between Graphjet Technology and NVent Electric

Considering the 90-day investment horizon Graphjet Technology is expected to generate 2.32 times less return on investment than NVent Electric. In addition to that, Graphjet Technology is 4.78 times more volatile than nVent Electric PLC. It trades about 0.01 of its total potential returns per unit of risk. nVent Electric PLC is currently generating about 0.12 per unit of volatility. If you would invest  4,727  in nVent Electric PLC on March 17, 2024 and sell it today you would earn a total of  3,128  from holding nVent Electric PLC or generate 66.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	72.69%
Values	Daily Returns

Graphjet Technology  vs.  nVent Electric PLC

Graphjet Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphjet Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

nVent Electric PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in nVent Electric PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, NVent Electric may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Graphjet Technology and NVent Electric

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

The idea behind Graphjet Technology and nVent Electric PLC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.