Correlation Between Focus Graphite and Surge Copper
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Surge Copper 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 Surge Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Surge Copper Corp, you can compare the effects of market volatilities on Focus Graphite and Surge Copper 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 Surge Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Surge Copper.
Diversification Opportunities for Focus Graphite and Surge Copper
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Focus and Surge is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Surge Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surge Copper Corp 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 Surge Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surge Copper Corp has no effect on the direction of Focus Graphite i.e., Focus Graphite and Surge Copper go up and down completely randomly.
Pair Corralation between Focus Graphite and Surge Copper
Assuming the 90 days horizon Focus Graphite is expected to generate 2.13 times more return on investment than Surge Copper. However, Focus Graphite is 2.13 times more volatile than Surge Copper Corp. It trades about 0.12 of its potential returns per unit of risk. Surge Copper Corp is currently generating about -0.14 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Graphite vs. Surge Copper Corp
Performance |
| Timeline |
| Focus Graphite |
| Surge Copper Corp |
Focus Graphite and Surge Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Graphite and Surge Copper
The main advantage of trading using opposite Focus Graphite and Surge Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Surge Copper 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 Surge Copper will offset losses from the drop in Surge Copper'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 |
| Surge Copper vs. Pampa Metals | Surge Copper vs. Progressive Planet Solutions | Surge Copper vs. Searchlight Resources | Surge Copper vs. Durango Resources |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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