Correlation Between Graphite One and Black Mammoth

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

By analyzing existing cross correlation between Graphite One and Black Mammoth Metals, you can compare the effects of market volatilities on Graphite One and Black Mammoth 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 Graphite One with a short position of Black Mammoth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphite One and Black Mammoth.

Diversification Opportunities for Graphite One and Black Mammoth

0.25

Correlation Coefficient

Graphite One  Black Mammoth

Modest diversification

The 3 months correlation between Graphite and Black is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and Black Mammoth Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Mammoth Metals and Graphite One 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 Graphite One are associated (or correlated) with Black Mammoth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Mammoth Metals has no effect on the direction of Graphite One i.e., Graphite One and Black Mammoth go up and down completely randomly.

Pair Corralation between Graphite One and Black Mammoth

Assuming the 90 days horizon Graphite One is expected to generate 35.08 times less return on investment than Black Mammoth. But when comparing it to its historical volatility, Graphite One is 1.88 times less risky than Black Mammoth. It trades about 0.0 of its potential returns per unit of risk. Black Mammoth Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Black Mammoth Metals on September 29, 2024 and sell it today you would earn a total of  10.00  from holding Black Mammoth Metals or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Graphite One  vs.  Black Mammoth Metals

Graphite One

Risk-Adjusted Performance

0 of 100

Very Weak

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

Black Mammoth Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Black Mammoth Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Black Mammoth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphite One and Black Mammoth

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

The idea behind Graphite One and Black Mammoth Metals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.