Correlation Between Northern Graphite and ZEN Graphene
Can any of the company-specific risk be diversified away by investing in both Northern Graphite and ZEN Graphene 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 Northern Graphite and ZEN Graphene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Graphite and ZEN Graphene Solutions, you can compare the effects of market volatilities on Northern Graphite and ZEN Graphene 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 Northern Graphite with a short position of ZEN Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Graphite and ZEN Graphene.
Diversification Opportunities for Northern Graphite and ZEN Graphene
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Northern and ZEN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and ZEN Graphene Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZEN Graphene Solutions and Northern 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 Northern Graphite are associated (or correlated) with ZEN Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZEN Graphene Solutions has no effect on the direction of Northern Graphite i.e., Northern Graphite and ZEN Graphene go up and down completely randomly.
Pair Corralation between Northern Graphite and ZEN Graphene
Assuming the 90 days horizon Northern Graphite is expected to generate 1.59 times more return on investment than ZEN Graphene. However, Northern Graphite is 1.59 times more volatile than ZEN Graphene Solutions. It trades about 0.09 of its potential returns per unit of risk. ZEN Graphene Solutions is currently generating about 0.1 per unit of risk. If you would invest 8.50 in Northern Graphite on December 1, 2024 and sell it today you would earn a total of 3.50 from holding Northern Graphite or generate 41.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Graphite vs. ZEN Graphene Solutions
Performance |
| Timeline |
| Northern Graphite |
| ZEN Graphene Solutions |
Northern Graphite and ZEN Graphene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Graphite and ZEN Graphene
The main advantage of trading using opposite Northern Graphite and ZEN Graphene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Graphite position performs unexpectedly, ZEN Graphene 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 ZEN Graphene will offset losses from the drop in ZEN Graphene's long position.| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Lomiko Metals | Northern Graphite vs. Graphite One |
| ZEN Graphene vs. American Manganese | ZEN Graphene vs. Frontier Lithium | ZEN Graphene vs. Graphene Manufacturing Group | ZEN Graphene vs. Northern Graphite |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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