Correlation Between Focus Graphite and Kraken Energy

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

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

Diversification Opportunities for Focus Graphite and Kraken Energy

0.49

Correlation Coefficient

Focus Graphite  Kraken Energy

Very weak diversification

The 3 months correlation between Focus and Kraken is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Focus Graphite and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp 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 Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Focus Graphite i.e., Focus Graphite and Kraken Energy go up and down completely randomly.

Pair Corralation between Focus Graphite and Kraken Energy

Assuming the 90 days horizon Focus Graphite is expected to generate 1.01 times more return on investment than Kraken Energy. However, Focus Graphite is 1.01 times more volatile than Kraken Energy Corp. It trades about 0.0 of its potential returns per unit of risk. Kraken Energy Corp is currently generating about -0.09 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.  Kraken Energy Corp

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.

Kraken Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kraken Energy Corp 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 basic 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 Kraken Energy

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

The idea behind Focus Graphite and Kraken Energy Corp 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.