Correlation Between Focus Graphite and Nano One

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

Diversification Opportunities for Focus Graphite and Nano One

0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between Focus and Nano is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Focus Graphite i.e., Focus Graphite and Nano One go up and down completely randomly.

Pair Corralation between Focus Graphite and Nano One

Assuming the 90 days horizon Focus Graphite is expected to generate 1.2 times more return on investment than Nano One. However, Focus Graphite is 1.2 times more volatile than Nano One Materials. It trades about -0.03 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.05 per unit of risk. If you would invest  21.00  in Focus Graphite on October 5, 2024 and sell it today you would lose (13.00) from holding Focus Graphite or give up 61.9% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Focus Graphite  vs.  Nano One Materials

 Performance 
       Timeline  
Focus Graphite 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Focus Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Focus Graphite is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Nano One Materials 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nano One Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Focus Graphite and Nano One Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Focus Graphite and Nano One

The main advantage of trading using opposite Focus Graphite and Nano One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Graphite position performs unexpectedly, Nano 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 Nano One will offset losses from the drop in Nano One's long position.
The idea behind Focus Graphite and Nano One Materials 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.

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