Correlation Between Graphite One and Monarca Minerals

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

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

Diversification Opportunities for Graphite One and Monarca Minerals

0.28

Correlation Coefficient

Graphite One  Monarca Minerals

Modest diversification

The 3 months correlation between Graphite and Monarca is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and Monarca Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarca Minerals 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 Monarca Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarca Minerals has no effect on the direction of Graphite One i.e., Graphite One and Monarca Minerals go up and down completely randomly.

Pair Corralation between Graphite One and Monarca Minerals

Assuming the 90 days horizon Graphite One is expected to generate 0.98 times more return on investment than Monarca Minerals. However, Graphite One is 1.02 times less risky than Monarca Minerals. It trades about 0.04 of its potential returns per unit of risk. Monarca Minerals is currently generating about -0.09 per unit of risk. If you would invest  65.00  in Graphite One on September 29, 2024 and sell it today you would earn a total of  8.00  from holding Graphite One or generate 12.31% return on investment over 90 days.

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

Graphite One  vs.  Monarca Minerals

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.

Monarca Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarca Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Graphite One and Monarca Minerals

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

The idea behind Graphite One and Monarca Minerals 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 Transaction History module to view history of all your transactions and understand their impact on performance.