Correlation Between Northern Graphite and Focus Graphite
Can any of the company-specific risk be diversified away by investing in both Northern Graphite and Focus Graphite 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 Focus Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Graphite and Focus Graphite, you can compare the effects of market volatilities on Northern Graphite and Focus Graphite 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 Focus Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Graphite and Focus Graphite.
Diversification Opportunities for Northern Graphite and Focus Graphite
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Northern and Focus is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite 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 Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of Northern Graphite i.e., Northern Graphite and Focus Graphite go up and down completely randomly.
Pair Corralation between Northern Graphite and Focus Graphite
Assuming the 90 days horizon Northern Graphite is expected to generate 1.01 times more return on investment than Focus Graphite. However, Northern Graphite is 1.01 times more volatile than Focus Graphite. It trades about 0.0 of its potential returns per unit of risk. Focus Graphite is currently generating about -0.01 per unit of risk. If you would invest 44.00 in Northern Graphite on October 20, 2024 and sell it today you would lose (33.00) from holding Northern Graphite or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Graphite vs. Focus Graphite
Performance |
| Timeline |
| Northern Graphite |
| Focus Graphite |
Northern Graphite and Focus Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Graphite and Focus Graphite
The main advantage of trading using opposite Northern Graphite and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Graphite position performs unexpectedly, Focus Graphite 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 Focus Graphite will offset losses from the drop in Focus Graphite's long position.| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Graphite One | Northern Graphite vs. Syrah Resources Limited |
| Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
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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