Correlation Between Graph and FRM

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

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

Diversification Opportunities for Graph and FRM

0.57

Correlation Coefficient

Graph  FRM

Very weak diversification

The 3 months correlation between Graph and FRM is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding The Graph and FRM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRM and Graph 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 The Graph are associated (or correlated) with FRM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRM has no effect on the direction of Graph i.e., Graph and FRM go up and down completely randomly.

Pair Corralation between Graph and FRM

Assuming the 90 days trading horizon Graph is expected to generate 4.74 times less return on investment than FRM. But when comparing it to its historical volatility, The Graph is 7.34 times less risky than FRM. It trades about 0.26 of its potential returns per unit of risk. FRM is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  0.11  in FRM on February 6, 2025 and sell it today you would earn a total of  0.09  from holding FRM or generate 81.91% return on investment over 90 days.

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

The Graph  vs.  FRM

Graph

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Graph has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for The Graph shareholders.

FRM

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FRM are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, FRM exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graph and FRM

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

The idea behind The Graph and FRM 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.