Correlation Between Focus Graphite and Blue Moon

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Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Blue Moon 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 Blue Moon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Blue Moon Metals, you can compare the effects of market volatilities on Focus Graphite and Blue Moon 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 Blue Moon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Blue Moon.

Diversification Opportunities for Focus Graphite and Blue Moon

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Focus and Blue is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Blue Moon Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Moon Metals 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 Blue Moon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Moon Metals has no effect on the direction of Focus Graphite i.e., Focus Graphite and Blue Moon go up and down completely randomly.

Pair Corralation between Focus Graphite and Blue Moon

Assuming the 90 days horizon Focus Graphite is expected to generate 6.47 times more return on investment than Blue Moon. However, Focus Graphite is 6.47 times more volatile than Blue Moon Metals. It trades about 0.06 of its potential returns per unit of risk. Blue Moon Metals is currently generating about -0.09 per unit of risk. If you would invest  6.00  in Focus Graphite on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Focus Graphite or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Focus Graphite  vs.  Blue Moon Metals

 Performance 
       Timeline  
Focus Graphite 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Focus Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Focus Graphite is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Blue Moon Metals 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Focus Graphite and Blue Moon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Focus Graphite and Blue Moon

The main advantage of trading using opposite Focus Graphite and Blue Moon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Blue Moon 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 Blue Moon will offset losses from the drop in Blue Moon's long position.
The idea behind Focus Graphite and Blue Moon Metals 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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