Correlation Between Focus Graphite and Antioquia Gold

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

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

Diversification Opportunities for Focus Graphite and Antioquia Gold

-0.18

Correlation Coefficient

Focus Graphite  Antioquia Gold

Good diversification

The 3 months correlation between Focus and Antioquia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Antioquia Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antioquia Gold and Focus 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 Focus Graphite are associated (or correlated) with Antioquia Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antioquia Gold has no effect on the direction of Focus Graphite i.e., Focus Graphite and Antioquia Gold go up and down completely randomly.

Pair Corralation between Focus Graphite and Antioquia Gold

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Antioquia Gold. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 22.31 times less risky than Antioquia Gold. The otc stock trades about -0.02 of its potential returns per unit of risk. The Antioquia Gold is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Antioquia Gold on October 5, 2024 and sell it today you would lose (0.50) from holding Antioquia Gold or give up 25.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Focus Graphite  vs.  Antioquia Gold

Focus Graphite

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Graphite are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Focus Graphite reported solid returns over the last few months and may actually be approaching a breakup point.

Antioquia Gold

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Antioquia Gold are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Antioquia Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Graphite and Antioquia Gold

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

The idea behind Focus Graphite and Antioquia Gold 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.