Correlation Between Ceylon Graphite and Rokmaster Resources

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

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

Diversification Opportunities for Ceylon Graphite and Rokmaster Resources

0.36

Correlation Coefficient

Ceylon Graphite  Rokmaster Resources

Weak diversification

The 3 months correlation between Ceylon and Rokmaster is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Ceylon Graphite Corp and Rokmaster Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rokmaster Resources Corp and Ceylon 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 Ceylon Graphite Corp are associated (or correlated) with Rokmaster Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rokmaster Resources Corp has no effect on the direction of Ceylon Graphite i.e., Ceylon Graphite and Rokmaster Resources go up and down completely randomly.

Pair Corralation between Ceylon Graphite and Rokmaster Resources

Assuming the 90 days horizon Ceylon Graphite Corp is expected to generate 0.71 times more return on investment than Rokmaster Resources. However, Ceylon Graphite Corp is 1.41 times less risky than Rokmaster Resources. It trades about 0.03 of its potential returns per unit of risk. Rokmaster Resources Corp is currently generating about -0.03 per unit of risk. If you would invest  1.36  in Ceylon Graphite Corp on September 4, 2024 and sell it today you would lose (0.09) from holding Ceylon Graphite Corp or give up 6.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Ceylon Graphite Corp  vs.  Rokmaster Resources Corp

Ceylon Graphite Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Rokmaster Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rokmaster Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ceylon Graphite and Rokmaster Resources

The main advantage of trading using opposite Ceylon Graphite and Rokmaster Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ceylon Graphite position performs unexpectedly, Rokmaster Resources 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 Rokmaster Resources will offset losses from the drop in Rokmaster Resources' long position.

The idea behind Ceylon Graphite Corp and Rokmaster Resources Corp 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.