Correlation Between Graphite One and ExGen Resources

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

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

Diversification Opportunities for Graphite One and ExGen Resources

0.02

Correlation Coefficient

Graphite One  ExGen Resources

Significant diversification

The 3 months correlation between Graphite and ExGen is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and ExGen Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExGen Resources 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 ExGen Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExGen Resources has no effect on the direction of Graphite One i.e., Graphite One and ExGen Resources go up and down completely randomly.

Pair Corralation between Graphite One and ExGen Resources

Assuming the 90 days horizon Graphite One is expected to generate 42.03 times less return on investment than ExGen Resources. But when comparing it to its historical volatility, Graphite One is 2.88 times less risky than ExGen Resources. It trades about 0.0 of its potential returns per unit of risk. ExGen Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.00  in ExGen Resources on September 29, 2024 and sell it today you would earn a total of  0.00  from holding ExGen Resources or generate 0.0% return on investment over 90 days.

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

Graphite One  vs.  ExGen Resources

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.

ExGen Resources

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ExGen Resources are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, ExGen Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphite One and ExGen Resources

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

The idea behind Graphite One and ExGen 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.