Correlation Between NioCorp Developments and Focus Graphite

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

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

Diversification Opportunities for NioCorp Developments and Focus Graphite

0.41

Correlation Coefficient

NioCorp Developments  Focus Graphite

Very weak diversification

The 3 months correlation between NioCorp and Focus is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and NioCorp Developments 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 NioCorp Developments Ltd 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 NioCorp Developments i.e., NioCorp Developments and Focus Graphite go up and down completely randomly.

Pair Corralation between NioCorp Developments and Focus Graphite

Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Focus Graphite. But the stock apears to be less risky and, when comparing its historical volatility, NioCorp Developments Ltd is 1.58 times less risky than Focus Graphite. The stock trades about -0.06 of its potential returns per unit of risk. The Focus Graphite is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Focus Graphite on August 31, 2024 and sell it today you would lose (16.00) from holding Focus Graphite or give up 76.19% of portfolio value over 90 days.

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

NioCorp Developments Ltd  vs.  Focus Graphite

NioCorp Developments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NioCorp Developments Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company 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. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NioCorp Developments and Focus Graphite

The main advantage of trading using opposite NioCorp Developments and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments 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 NioCorp Developments Ltd 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.