Correlation Between Focus Graphite and Nevada King

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

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

Diversification Opportunities for Focus Graphite and Nevada King

0.43

Correlation Coefficient

Focus Graphite  Nevada King

Very weak diversification

The 3 months correlation between Focus and Nevada is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Nevada King Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nevada King Gold 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 Nevada King. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nevada King Gold has no effect on the direction of Focus Graphite i.e., Focus Graphite and Nevada King go up and down completely randomly.

Pair Corralation between Focus Graphite and Nevada King

Assuming the 90 days horizon Focus Graphite is expected to generate 1.43 times more return on investment than Nevada King. However, Focus Graphite is 1.43 times more volatile than Nevada King Gold. It trades about 0.0 of its potential returns per unit of risk. Nevada King Gold is currently generating about -0.04 per unit of risk. If you would invest  8.00  in Focus Graphite on September 12, 2024 and sell it today you would lose (1.80) from holding Focus Graphite or give up 22.5% of portfolio value over 90 days.

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

Focus Graphite  vs.  Nevada King Gold

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.

Nevada King Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nevada King Gold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Focus Graphite and Nevada King

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

The idea behind Focus Graphite and Nevada King Gold 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.