Correlation Between Gratomic and Focus Graphite

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

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

Diversification Opportunities for Gratomic and Focus Graphite

0.41

Correlation Coefficient

Gratomic  Focus Graphite

Very weak diversification

The 3 months correlation between Gratomic and Focus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gratomic and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and Gratomic 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 Gratomic are associated (or correlated) with Focus Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Graphite has no effect on the direction of Gratomic i.e., Gratomic and Focus Graphite go up and down completely randomly.

Pair Corralation between Gratomic and Focus Graphite

Assuming the 90 days trading horizon Gratomic is expected to generate 1.79 times more return on investment than Focus Graphite. However, Gratomic is 1.79 times more volatile than Focus Graphite. It trades about 0.0 of its potential returns per unit of risk. Focus Graphite is currently generating about -0.12 per unit of risk. If you would invest  6.50  in Gratomic on September 3, 2024 and sell it today you would lose (1.50) from holding Gratomic or give up 23.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Gratomic  vs.  Focus Graphite

Gratomic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gratomic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gratomic is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Gratomic and Focus Graphite

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

The idea behind Gratomic and Focus Graphite 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..