Correlation Between Focus Graphite and Metals Creek

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

Diversification Opportunities for Focus Graphite and Metals Creek

-0.63

Correlation Coefficient

Focus Graphite  Metals Creek

Excellent diversification

The 3 months correlation between Focus and Metals is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Metals Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Creek 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 Metals Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Creek Resources has no effect on the direction of Focus Graphite i.e., Focus Graphite and Metals Creek go up and down completely randomly.

Pair Corralation between Focus Graphite and Metals Creek

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Metals Creek. But the otc stock apears to be less risky and, when comparing its historical volatility, Focus Graphite is 2.73 times less risky than Metals Creek. The otc stock trades about 0.0 of its potential returns per unit of risk. The Metals Creek Resources is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Metals Creek Resources on September 12, 2024 and sell it today you would earn a total of  0.74  from holding Metals Creek Resources or generate 37.0% return on investment over 90 days.

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

Focus Graphite  vs.  Metals Creek 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.

Metals Creek Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metals Creek Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Metals Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Focus Graphite and Metals Creek

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

The idea behind Focus Graphite and Metals Creek 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.