Correlation Between Northern Graphite and Monarca Minerals

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

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

Diversification Opportunities for Northern Graphite and Monarca Minerals

0.0

Correlation Coefficient

Northern Graphite  Monarca Minerals

Pay attention - limited upside

The 3 months correlation between Northern and Monarca is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Northern Graphite and Monarca Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarca Minerals and Northern 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 Northern Graphite 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 Northern Graphite i.e., Northern Graphite and Monarca Minerals go up and down completely randomly.

Pair Corralation between Northern Graphite and Monarca Minerals

If you would invest  8.50  in Northern Graphite on September 27, 2024 and sell it today you would earn a total of  7.50  from holding Northern Graphite or generate 88.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Northern Graphite  vs.  Monarca Minerals

Northern Graphite

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northern Graphite are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Northern Graphite showed solid returns over the last few months and may actually be approaching a breakup point.

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 fairly stable basic indicators, Monarca Minerals is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Northern Graphite and Monarca Minerals

The main advantage of trading using opposite Northern Graphite and Monarca Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Graphite 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 Northern Graphite 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.