Correlation Between EM and Graph

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

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

Diversification Opportunities for EM and Graph

0.0

Correlation Coefficient

EM  Graph

Pay attention - limited upside

The 3 months correlation between EM and Graph is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EM and The Graph in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graph and EM 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 EM are associated (or correlated) with Graph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graph has no effect on the direction of EM i.e., EM and Graph go up and down completely randomly.

Pair Corralation between EM and Graph

If you would invest  10.00  in The Graph on April 24, 2025 and sell it today you would earn a total of  1.00  from holding The Graph or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

EM  vs.  The Graph

EM

Risk-Adjusted Performance

Very Weak

Over the last 90 days EM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, EM is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Graph

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Graph are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Graph exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EM and Graph

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

The idea behind EM and The Graph 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.