Correlation Between Focus Graphite and Zinc One

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

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

Diversification Opportunities for Focus Graphite and Zinc One

0.61

Correlation Coefficient

Focus Graphite  Zinc One

Poor diversification

The 3 months correlation between Focus and Zinc is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Zinc One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zinc One 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 Zinc One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zinc One Resources has no effect on the direction of Focus Graphite i.e., Focus Graphite and Zinc One go up and down completely randomly.

Pair Corralation between Focus Graphite and Zinc One

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Zinc One. In addition to that, Focus Graphite is 244.73 times more volatile than Zinc One Resources. It trades about -0.04 of its total potential returns per unit of risk. Zinc One Resources is currently generating about -0.15 per unit of volatility. If you would invest  8.03  in Zinc One Resources on September 3, 2024 and sell it today you would lose (0.02) from holding Zinc One Resources or give up 0.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	70.31%
Values	Daily Returns

Focus Graphite  vs.  Zinc One 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 abnormal performance in the last few months, the Stock's primary 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.

Zinc One Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zinc One Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Zinc One 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 Zinc One

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

The idea behind Focus Graphite and Zinc One 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.