Correlation Between Focus Graphite and Alpha Lithium
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Alpha Lithium 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 Focus Graphite and Alpha Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Alpha Lithium, you can compare the effects of market volatilities on Focus Graphite and Alpha Lithium 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 Focus Graphite with a short position of Alpha Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Alpha Lithium.
Diversification Opportunities for Focus Graphite and Alpha Lithium
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Focus and Alpha is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Alpha Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Lithium and Focus Graphite 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 Focus Graphite are associated (or correlated) with Alpha Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Lithium has no effect on the direction of Focus Graphite i.e., Focus Graphite and Alpha Lithium go up and down completely randomly.
Pair Corralation between Focus Graphite and Alpha Lithium
Assuming the 90 days horizon Focus Graphite is expected to under-perform the Alpha Lithium. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 1.3 times less risky than Alpha Lithium. The otc stock trades about 0.0 of its potential returns per unit of risk. The Alpha Lithium is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Alpha Lithium on September 14, 2024 and sell it today you would lose (14.00) from holding Alpha Lithium or give up 45.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Graphite vs. Alpha Lithium
Performance |
| Timeline |
| Focus Graphite |
| Alpha Lithium |
Focus Graphite and Alpha Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Alpha Lithium
The main advantage of trading using opposite Focus Graphite and Alpha Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Alpha Lithium 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 Alpha Lithium will offset losses from the drop in Alpha Lithium's long position.| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
| Alpha Lithium vs. Qubec Nickel Corp | Alpha Lithium vs. IGO Limited | Alpha Lithium vs. Focus Graphite | Alpha Lithium vs. Mineral Res |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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