Correlation Between Graphite One and Cariboo Rose

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

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

Diversification Opportunities for Graphite One and Cariboo Rose

-0.45

Correlation Coefficient

Graphite One  Cariboo Rose

Very good diversification

The 3 months correlation between Graphite and Cariboo is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Graphite One and Cariboo Rose Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cariboo Rose Resources and Graphite One 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 Graphite One are associated (or correlated) with Cariboo Rose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cariboo Rose Resources has no effect on the direction of Graphite One i.e., Graphite One and Cariboo Rose go up and down completely randomly.

Pair Corralation between Graphite One and Cariboo Rose

Assuming the 90 days horizon Graphite One is expected to generate 2.68 times less return on investment than Cariboo Rose. But when comparing it to its historical volatility, Graphite One is 3.79 times less risky than Cariboo Rose. It trades about 0.1 of its potential returns per unit of risk. Cariboo Rose Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Cariboo Rose Resources on March 12, 2024 and sell it today you would earn a total of  0.00  from holding Cariboo Rose Resources or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Graphite One  vs.  Cariboo Rose Resources

Graphite One

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graphite One 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 July 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Cariboo Rose Resources

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cariboo Rose Resources are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Cariboo Rose showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graphite One and Cariboo Rose

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

The idea behind Graphite One and Cariboo Rose Resources 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.