Correlation Between Focus Graphite and Gossan Resources

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

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

Diversification Opportunities for Focus Graphite and Gossan Resources

0.56

Correlation Coefficient

Focus Graphite  Gossan Resources

Very weak diversification

The 3 months correlation between Focus and Gossan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Gossan Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossan Resources 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 Gossan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossan Resources has no effect on the direction of Focus Graphite i.e., Focus Graphite and Gossan Resources go up and down completely randomly.

Pair Corralation between Focus Graphite and Gossan Resources

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Gossan Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 2.94 times less risky than Gossan Resources. The otc stock trades about 0.0 of its potential returns per unit of risk. The Gossan Resources Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2.04  in Gossan Resources Limited on September 28, 2024 and sell it today you would lose (1.07) from holding Gossan Resources Limited or give up 52.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.13%
Values	Daily Returns

Focus Graphite  vs.  Gossan Resources Limited

Focus Graphite

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Focus Graphite are ranked lower than 2 (%) 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.

Gossan Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gossan Resources 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 basic 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 Gossan Resources

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

The idea behind Focus Graphite and Gossan Resources 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 CEOs Directory module to screen CEOs from public companies around the world.