Correlation Between Focus Graphite and Ardiden

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

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

Diversification Opportunities for Focus Graphite and Ardiden

0.17

Correlation Coefficient

Focus Graphite  Ardiden

Average diversification

The 3 months correlation between Focus and Ardiden is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Ardiden Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardiden Limited 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 Ardiden. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardiden Limited has no effect on the direction of Focus Graphite i.e., Focus Graphite and Ardiden go up and down completely randomly.

Pair Corralation between Focus Graphite and Ardiden

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Ardiden. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 10.26 times less risky than Ardiden. The otc stock trades about -0.01 of its potential returns per unit of risk. The Ardiden Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Ardiden Limited on September 13, 2024 and sell it today you would earn a total of  0.04  from holding Ardiden Limited or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Focus Graphite  vs.  Ardiden Limited

Focus Graphite

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Graphite are ranked lower than 3 (%) 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.

Ardiden Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardiden Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental 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 Focus Graphite and Ardiden

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

The idea behind Focus Graphite and Ardiden Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.