Correlation Between Focus Graphite and Nickel Mines

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

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

Diversification Opportunities for Focus Graphite and Nickel Mines

-0.04

Correlation Coefficient

Focus Graphite  Nickel Mines

Good diversification

The 3 months correlation between Focus and Nickel is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Nickel Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nickel Mines Limited and Focus 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 Focus Graphite are associated (or correlated) with Nickel Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nickel Mines Limited has no effect on the direction of Focus Graphite i.e., Focus Graphite and Nickel Mines go up and down completely randomly.

Pair Corralation between Focus Graphite and Nickel Mines

Assuming the 90 days horizon Focus Graphite is expected to under-perform the Nickel Mines. In addition to that, Focus Graphite is 1.65 times more volatile than Nickel Mines Limited. It trades about 0.0 of its total potential returns per unit of risk. Nickel Mines Limited is currently generating about 0.04 per unit of volatility. If you would invest  43.00  in Nickel Mines Limited on September 12, 2024 and sell it today you would earn a total of  12.00  from holding Nickel Mines Limited or generate 27.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Focus Graphite  vs.  Nickel Mines Limited

Focus Graphite

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nickel Mines Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Focus Graphite and Nickel Mines

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

The idea behind Focus Graphite and Nickel Mines Limited 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .