Correlation Between First Graphene and BASF SE

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

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

Diversification Opportunities for First Graphene and BASF SE

0.21

Correlation Coefficient

First Graphene  BASF SE

Modest diversification

The 3 months correlation between First and BASF is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding First Graphene and BASF SE NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASF SE NA and First Graphene 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 First Graphene are associated (or correlated) with BASF SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASF SE NA has no effect on the direction of First Graphene i.e., First Graphene and BASF SE go up and down completely randomly.

Pair Corralation between First Graphene and BASF SE

Assuming the 90 days horizon First Graphene is expected to generate 6.52 times more return on investment than BASF SE. However, First Graphene is 6.52 times more volatile than BASF SE NA. It trades about 0.06 of its potential returns per unit of risk. BASF SE NA is currently generating about 0.07 per unit of risk. If you would invest  2.60  in First Graphene on May 19, 2025 and sell it today you would lose (0.20) from holding First Graphene or give up 7.69% of portfolio value over 90 days.

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

First Graphene  vs.  BASF SE NA

First Graphene

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in First Graphene are ranked lower than 4 (%) 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.

BASF SE NA

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in BASF SE NA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BASF SE may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with First Graphene and BASF SE

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

The idea behind First Graphene and BASF SE NA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.