Correlation Between Mason Graphite and Leading Edge

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

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

Diversification Opportunities for Mason Graphite and Leading Edge

0.46

Correlation Coefficient

Mason Graphite  Leading Edge

Very weak diversification

The 3 months correlation between Mason and Leading is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mason Graphite and Leading Edge Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leading Edge Materials and Mason 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 Mason Graphite are associated (or correlated) with Leading Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leading Edge Materials has no effect on the direction of Mason Graphite i.e., Mason Graphite and Leading Edge go up and down completely randomly.

Pair Corralation between Mason Graphite and Leading Edge

Assuming the 90 days horizon Mason Graphite is expected to under-perform the Leading Edge. But the otc stock apears to be less risky and, when comparing its historical volatility, Mason Graphite is 1.08 times less risky than Leading Edge. The otc stock trades about -0.31 of its potential returns per unit of risk. The Leading Edge Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.70  in Leading Edge Materials on September 9, 2024 and sell it today you would earn a total of  0.00  from holding Leading Edge Materials or generate 0.0% return on investment over 90 days.

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

Mason Graphite  vs.  Leading Edge Materials

Mason Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mason Graphite has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical 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.

Leading Edge Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leading Edge Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Leading Edge is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Mason Graphite and Leading Edge

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

The idea behind Mason Graphite and Leading Edge 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.