Correlation Between Focus Graphite and Alpha Copper

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

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

Diversification Opportunities for Focus Graphite and Alpha Copper

0.1

Correlation Coefficient

Focus Graphite  Alpha Copper

Average diversification

The 3 months correlation between Focus and Alpha is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Alpha Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Copper Corp 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 Alpha Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Copper Corp has no effect on the direction of Focus Graphite i.e., Focus Graphite and Alpha Copper go up and down completely randomly.

Pair Corralation between Focus Graphite and Alpha Copper

Assuming the 90 days horizon Focus Graphite is expected to generate 1.43 times less return on investment than Alpha Copper. In addition to that, Focus Graphite is 1.32 times more volatile than Alpha Copper Corp. It trades about 0.01 of its total potential returns per unit of risk. Alpha Copper Corp is currently generating about 0.02 per unit of volatility. If you would invest  9.81  in Alpha Copper Corp on October 6, 2024 and sell it today you would lose (0.51) from holding Alpha Copper Corp or give up 5.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Focus Graphite  vs.  Alpha Copper Corp

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 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Alpha Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Focus Graphite and Alpha Copper

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

The idea behind Focus Graphite and Alpha Copper 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.