Correlation Between Ressources Minieres and Focus Graphite

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

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

Diversification Opportunities for Ressources Minieres and Focus Graphite

0.1

Correlation Coefficient

Ressources Minieres  Focus Graphite

Average diversification

The 3 months correlation between Ressources and Focus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ressources Minieres Radisson and Focus Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Graphite and Ressources Minieres 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 Ressources Minieres Radisson 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 Ressources Minieres i.e., Ressources Minieres and Focus Graphite go up and down completely randomly.

Pair Corralation between Ressources Minieres and Focus Graphite

Assuming the 90 days horizon Ressources Minieres Radisson is expected to generate 1.14 times more return on investment than Focus Graphite. However, Ressources Minieres is 1.14 times more volatile than Focus Graphite. It trades about 0.04 of its potential returns per unit of risk. Focus Graphite is currently generating about 0.0 per unit of risk. If you would invest  27.00  in Ressources Minieres Radisson on September 13, 2024 and sell it today you would earn a total of  1.00  from holding Ressources Minieres Radisson or generate 3.7% return on investment over 90 days.

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

Ressources Minieres Radisson  vs.  Focus Graphite

Ressources Minieres

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ressources Minieres Radisson are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Ressources Minieres showed solid returns over the last few months and may actually be approaching a breakup point.

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 fairly stable basic indicators, Focus Graphite is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Ressources Minieres and Focus Graphite

The main advantage of trading using opposite Ressources Minieres and Focus Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ressources Minieres 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 Ressources Minieres Radisson 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.