Correlation Between Commerce Resources and Focus Graphite
Can any of the company-specific risk be diversified away by investing in both Commerce Resources and Focus Graphite 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 Commerce Resources and Focus Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commerce Resources Corp and Focus Graphite, you can compare the effects of market volatilities on Commerce Resources and Focus Graphite 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 Commerce Resources with a short position of Focus Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commerce Resources and Focus Graphite.
Diversification Opportunities for Commerce Resources and Focus Graphite
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Commerce and Focus is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Commerce Resources Corp and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and Commerce Resources 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 Commerce Resources Corp are associated (or correlated) with Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of Commerce Resources i.e., Commerce Resources and Focus Graphite go up and down completely randomly.
Pair Corralation between Commerce Resources and Focus Graphite
Assuming the 90 days horizon Commerce Resources Corp is expected to generate 1.15 times more return on investment than Focus Graphite. However, Commerce Resources is 1.15 times more volatile than Focus Graphite. It trades about 0.01 of its potential returns per unit of risk. Focus Graphite is currently generating about -0.03 per unit of risk. If you would invest 18.00 in Commerce Resources Corp on August 30, 2024 and sell it today you would lose (10.50) from holding Commerce Resources Corp or give up 58.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commerce Resources Corp vs. Focus Graphite
Performance |
| Timeline |
| Commerce Resources Corp |
| Focus Graphite |
Commerce Resources and Focus Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commerce Resources and Focus Graphite
The main advantage of trading using opposite Commerce Resources and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commerce Resources position performs unexpectedly, Focus Graphite 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 Focus Graphite will offset losses from the drop in Focus Graphite's long position.The idea behind Commerce Resources Corp and Focus Graphite 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.| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Mason Graphite | Focus Graphite vs. Lomiko Metals | Focus Graphite vs. Graphite One |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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