Correlation Between Aluminumof China and Forsys Metals
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and Forsys Metals 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 Aluminumof China and Forsys Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Forsys Metals Corp, you can compare the effects of market volatilities on Aluminumof China and Forsys Metals 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 Aluminumof China with a short position of Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Forsys Metals.
Diversification Opportunities for Aluminumof China and Forsys Metals
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aluminumof and Forsys is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp and Aluminumof China 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 Aluminum of are associated (or correlated) with Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Aluminumof China i.e., Aluminumof China and Forsys Metals go up and down completely randomly.
Pair Corralation between Aluminumof China and Forsys Metals
Assuming the 90 days horizon Aluminum of is expected to generate 0.92 times more return on investment than Forsys Metals. However, Aluminum of is 1.09 times less risky than Forsys Metals. It trades about 0.06 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about -0.02 per unit of risk. If you would invest 45.00 in Aluminum of on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Aluminum of or generate 44.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.85% |
| Values | Daily Returns |
Aluminum of vs. Forsys Metals Corp
Performance |
| Timeline |
| Aluminumof China |
| Forsys Metals Corp |
Aluminumof China and Forsys Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Forsys Metals
The main advantage of trading using opposite Aluminumof China and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, Forsys Metals 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 Forsys Metals will offset losses from the drop in Forsys Metals' long position.| Aluminumof China vs. Air China Limited | Aluminumof China vs. COSCO SHIPPING Holdings | Aluminumof China vs. Zijin Mining Group | Aluminumof China vs. Bank of China |
| Forsys Metals vs. Lotus Resources Limited | Forsys Metals vs. Namibia Critical Metals | Forsys Metals vs. Skyharbour Resources | Forsys Metals vs. Pasinex Resources Limited |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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