Correlation Between Focus Graphite and Pilbara Minerals
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Pilbara Minerals 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 Pilbara Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Pilbara Minerals Limited, you can compare the effects of market volatilities on Focus Graphite and Pilbara Minerals 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 Pilbara Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Pilbara Minerals.
Diversification Opportunities for Focus Graphite and Pilbara Minerals
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Focus and Pilbara is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Pilbara Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pilbara Minerals 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 Pilbara Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pilbara Minerals has no effect on the direction of Focus Graphite i.e., Focus Graphite and Pilbara Minerals go up and down completely randomly.
Pair Corralation between Focus Graphite and Pilbara Minerals
Assuming the 90 days horizon Focus Graphite is expected to generate 4.49 times more return on investment than Pilbara Minerals. However, Focus Graphite is 4.49 times more volatile than Pilbara Minerals Limited. It trades about 0.12 of its potential returns per unit of risk. Pilbara Minerals Limited is currently generating about -0.57 per unit of risk. If you would invest 6.00 in Focus Graphite on September 13, 2024 and sell it today you would earn a total of 1.00 from holding Focus Graphite or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Graphite vs. Pilbara Minerals Limited
Performance |
| Timeline |
| Focus Graphite |
| Pilbara Minerals |
Focus Graphite and Pilbara Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Pilbara Minerals
The main advantage of trading using opposite Focus Graphite and Pilbara Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Pilbara Minerals 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 Pilbara Minerals will offset losses from the drop in Pilbara Minerals' long position.| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
| Pilbara Minerals vs. Qubec Nickel Corp | Pilbara Minerals vs. IGO Limited | Pilbara Minerals vs. Focus Graphite | Pilbara Minerals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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