Correlation Between CEMATRIX and Focus Graphite

Can any of the company-specific risk be diversified away by investing in both CEMATRIX 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 CEMATRIX and Focus Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CEMATRIX and Focus Graphite, you can compare the effects of market volatilities on CEMATRIX 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 CEMATRIX with a short position of Focus Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEMATRIX and Focus Graphite.

Diversification Opportunities for CEMATRIX and Focus Graphite

-0.04

Correlation Coefficient

CEMATRIX  Focus Graphite

Good diversification

The 3 months correlation between CEMATRIX and Focus is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding CEMATRIX and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and CEMATRIX 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 CEMATRIX 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 CEMATRIX i.e., CEMATRIX and Focus Graphite go up and down completely randomly.

Pair Corralation between CEMATRIX and Focus Graphite

Assuming the 90 days horizon CEMATRIX is expected to under-perform the Focus Graphite. But the otc stock apears to be less risky and, when comparing its historical volatility, CEMATRIX is 2.62 times less risky than Focus Graphite. The otc stock trades about -0.06 of its potential returns per unit of risk. The Focus Graphite is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  5.00  in Focus Graphite on October 21, 2024 and sell it today you would earn a total of  1.00  from holding Focus Graphite or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

CEMATRIX  vs.  Focus Graphite

CEMATRIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEMATRIX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CEMATRIX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Focus Graphite

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Graphite are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Focus Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEMATRIX and Focus Graphite

The main advantage of trading using opposite CEMATRIX and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEMATRIX 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.

The idea behind CEMATRIX and Focus Graphite pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.