Correlation Between Focus Graphite and Lithium Energi
Can any of the company-specific risk be diversified away by investing in both Focus Graphite and Lithium Energi 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 Lithium Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Graphite and Lithium Energi Exploration, you can compare the effects of market volatilities on Focus Graphite and Lithium Energi 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 Lithium Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Graphite and Lithium Energi.
Diversification Opportunities for Focus Graphite and Lithium Energi
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Focus and Lithium is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Lithium Energi Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithium Energi Explo 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 Lithium Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithium Energi Explo has no effect on the direction of Focus Graphite i.e., Focus Graphite and Lithium Energi go up and down completely randomly.
Pair Corralation between Focus Graphite and Lithium Energi
Assuming the 90 days horizon Focus Graphite is expected to generate 2.79 times less return on investment than Lithium Energi. But when comparing it to its historical volatility, Focus Graphite is 1.85 times less risky than Lithium Energi. It trades about 0.04 of its potential returns per unit of risk. Lithium Energi Exploration is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2.46 in Lithium Energi Exploration on December 3, 2024 and sell it today you would lose (0.35) from holding Lithium Energi Exploration or give up 14.23% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Focus Graphite vs. Lithium Energi Exploration
Performance |
Timeline |
Focus Graphite |
Lithium Energi Explo |
Focus Graphite and Lithium Energi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Focus Graphite and Lithium Energi
The main advantage of trading using opposite Focus Graphite and Lithium Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Lithium Energi 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 Lithium Energi will offset losses from the drop in Lithium Energi's long position.Focus Graphite vs. Northern Graphite | Focus Graphite vs. Syrah Resources Limited | Focus Graphite vs. Altura Mining Limited | Focus Graphite vs. Vulcan Minerals |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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