Correlation Between Graphite One and Ridgestone Mining
Can any of the company-specific risk be diversified away by investing in both Graphite One and Ridgestone Mining 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 Graphite One and Ridgestone Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphite One and Ridgestone Mining, you can compare the effects of market volatilities on Graphite One and Ridgestone Mining 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 Graphite One with a short position of Ridgestone Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphite One and Ridgestone Mining.
Diversification Opportunities for Graphite One and Ridgestone Mining
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Graphite and Ridgestone is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and Ridgestone Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ridgestone Mining and Graphite One 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 Graphite One are associated (or correlated) with Ridgestone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ridgestone Mining has no effect on the direction of Graphite One i.e., Graphite One and Ridgestone Mining go up and down completely randomly.
Pair Corralation between Graphite One and Ridgestone Mining
Assuming the 90 days horizon Graphite One is expected to generate 2.07 times less return on investment than Ridgestone Mining. But when comparing it to its historical volatility, Graphite One is 3.4 times less risky than Ridgestone Mining. It trades about 0.23 of its potential returns per unit of risk. Ridgestone Mining is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3.90 in Ridgestone Mining on October 26, 2024 and sell it today you would earn a total of 0.96 from holding Ridgestone Mining or generate 24.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Graphite One vs. Ridgestone Mining
Performance |
| Timeline |
| Graphite One |
| Ridgestone Mining |
Graphite One and Ridgestone Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphite One and Ridgestone Mining
The main advantage of trading using opposite Graphite One and Ridgestone Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphite One position performs unexpectedly, Ridgestone Mining 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 Ridgestone Mining will offset losses from the drop in Ridgestone Mining's long position.| Graphite One vs. Mason Graphite | Graphite One vs. Northern Graphite | Graphite One vs. Lomiko Metals | Graphite One vs. IGO Limited |
| Ridgestone Mining vs. ZincX Resources Corp | Ridgestone Mining vs. Strategic Resources | Ridgestone Mining vs. Nuinsco Resources Limited | Ridgestone Mining vs. Qubec Nickel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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