Correlation Between Focus Graphite and Lomiko Metals
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Lomiko Metals 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 Lomiko Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Lomiko Metals, you can compare the effects of market volatilities on Focus Graphite and Lomiko Metals 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 Lomiko Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Lomiko Metals.
Diversification Opportunities for Focus Graphite and Lomiko Metals
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Focus and Lomiko is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Lomiko Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lomiko Metals 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 Lomiko Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lomiko Metals has no effect on the direction of Focus Graphite i.e., Focus Graphite and Lomiko Metals go up and down completely randomly.
Pair Corralation between Focus Graphite and Lomiko Metals
Assuming the 90 days horizon Focus Graphite is expected to generate 1.58 times more return on investment than Lomiko Metals. However, Focus Graphite is 1.58 times more volatile than Lomiko Metals. It trades about -0.06 of its potential returns per unit of risk. Lomiko Metals is currently generating about -0.24 per unit of risk. If you would invest 6.00 in Focus Graphite on August 27, 2024 and sell it today you would lose (1.00) from holding Focus Graphite or give up 16.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Graphite vs. Lomiko Metals
Performance |
| Timeline |
| Focus Graphite |
| Lomiko Metals |
Focus Graphite and Lomiko Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Lomiko Metals
The main advantage of trading using opposite Focus Graphite and Lomiko Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Lomiko Metals 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 Lomiko Metals will offset losses from the drop in Lomiko Metals' long position.| Focus Graphite vs. Ascendant Resources | Focus Graphite vs. Cantex Mine Development | Focus Graphite vs. Amarc Resources | Focus Graphite vs. Sterling Metals Corp |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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