Correlation Between Focus Graphite and Granite Creek

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

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

Diversification Opportunities for Focus Graphite and Granite Creek

0.09

Correlation Coefficient

Focus Graphite  Granite Creek

Significant diversification

The 3 months correlation between Focus and Granite is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Granite Creek Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Creek Copper 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 Granite Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Creek Copper has no effect on the direction of Focus Graphite i.e., Focus Graphite and Granite Creek go up and down completely randomly.

Pair Corralation between Focus Graphite and Granite Creek

Assuming the 90 days horizon Focus Graphite is expected to generate 9.19 times less return on investment than Granite Creek. But when comparing it to its historical volatility, Focus Graphite is 1.51 times less risky than Granite Creek. It trades about 0.01 of its potential returns per unit of risk. Granite Creek Copper is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1.37  in Granite Creek Copper on October 6, 2024 and sell it today you would earn a total of  0.06  from holding Granite Creek Copper or generate 4.38% 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.  Granite Creek Copper

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.

Granite Creek Copper

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Granite Creek Copper are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Granite Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Graphite and Granite Creek

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

The idea behind Focus Graphite and Granite Creek Copper 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.