Correlation Between Focus Graphite and Green Technology

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

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

Diversification Opportunities for Focus Graphite and Green Technology

0.38

Correlation Coefficient

Focus Graphite  Green Technology

Weak diversification

The 3 months correlation between Focus and Green is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Green Technology Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Technology 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 Green Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Technology Metals has no effect on the direction of Focus Graphite i.e., Focus Graphite and Green Technology go up and down completely randomly.

Pair Corralation between Focus Graphite and Green Technology

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Green Technology. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 2.32 times less risky than Green Technology. The otc stock trades about -0.02 of its potential returns per unit of risk. The Green Technology Metals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Green Technology Metals on October 7, 2024 and sell it today you would lose (12.80) from holding Green Technology Metals or give up 71.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Focus Graphite  vs.  Green Technology Metals

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.

Green Technology Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Focus Graphite and Green Technology

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

The idea behind Focus Graphite and Green Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.