Correlation Between Focus Graphite and Jourdan Resources

Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Jourdan 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 Jourdan 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 Jourdan Resources, you can compare the effects of market volatilities on Focus Graphite and Jourdan 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 Jourdan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Jourdan Resources.

Diversification Opportunities for Focus Graphite and Jourdan Resources

0.27

Correlation Coefficient

Focus Graphite  Jourdan Resources

Modest diversification

The 3 months correlation between Focus and Jourdan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Jourdan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jourdan 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 Jourdan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jourdan Resources has no effect on the direction of Focus Graphite i.e., Focus Graphite and Jourdan Resources go up and down completely randomly.

Pair Corralation between Focus Graphite and Jourdan Resources

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Jourdan Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 2.25 times less risky than Jourdan Resources. The otc stock trades about 0.0 of its potential returns per unit of risk. The Jourdan Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.98  in Jourdan Resources on October 4, 2024 and sell it today you would lose (0.19) from holding Jourdan Resources or give up 19.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Focus Graphite  vs.  Jourdan Resources

Focus Graphite

Risk-Adjusted Performance

0 of 100

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.

Jourdan Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jourdan Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Jourdan Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Graphite and Jourdan Resources

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

The idea behind Focus Graphite and Jourdan Resources 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.