Correlation Between South Star and Focus Graphite
Can any of the company-specific risk be diversified away by investing in both South Star 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 South Star and Focus Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Star Battery and Focus Graphite, you can compare the effects of market volatilities on South Star 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 South Star with a short position of Focus Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Star and Focus Graphite.
Diversification Opportunities for South Star and Focus Graphite
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between South and Focus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding South Star Battery and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and South Star 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 South Star Battery 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 South Star i.e., South Star and Focus Graphite go up and down completely randomly.
Pair Corralation between South Star and Focus Graphite
Assuming the 90 days horizon South Star Battery is expected to under-perform the Focus Graphite. But the otc stock apears to be less risky and, when comparing its historical volatility, South Star Battery is 1.69 times less risky than Focus Graphite. The otc stock trades about -0.02 of its potential returns per unit of risk. The Focus Graphite is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Focus Graphite on October 26, 2024 and sell it today you would lose (0.01) from holding Focus Graphite or give up 0.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.72% |
| Values | Daily Returns |
South Star Battery vs. Focus Graphite
Performance |
| Timeline |
| South Star Battery |
| Focus Graphite |
South Star and Focus Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Star and Focus Graphite
The main advantage of trading using opposite South Star and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Star 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.| South Star vs. ZincX Resources Corp | South Star vs. Nuinsco Resources Limited | South Star vs. Qubec Nickel Corp | South Star vs. Rockridge Resources |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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