Correlation Between Focus Graphite and Euro Manganese

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

Diversification Opportunities for Focus Graphite and Euro Manganese

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Focus and Euro is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Euro Manganese in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Manganese 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 Euro Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Manganese has no effect on the direction of Focus Graphite i.e., Focus Graphite and Euro Manganese go up and down completely randomly.

Pair Corralation between Focus Graphite and Euro Manganese

Assuming the 90 days horizon Focus Graphite is expected to generate 0.96 times more return on investment than Euro Manganese. However, Focus Graphite is 1.04 times less risky than Euro Manganese. It trades about -0.01 of its potential returns per unit of risk. Euro Manganese is currently generating about -0.03 per unit of risk. If you would invest  32.00  in Focus Graphite on September 16, 2024 and sell it today you would lose (26.00) from holding Focus Graphite or give up 81.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Focus Graphite  vs.  Euro Manganese

 Performance 
       Timeline  
Focus Graphite 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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 abnormal primary indicators, Focus Graphite may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Euro Manganese 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Euro Manganese are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Euro Manganese may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Focus Graphite and Euro Manganese Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Focus Graphite and Euro Manganese

The main advantage of trading using opposite Focus Graphite and Euro Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Euro Manganese 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 Euro Manganese will offset losses from the drop in Euro Manganese's long position.
The idea behind Focus Graphite and Euro Manganese 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.
Check out your portfolio center.
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.

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