Correlation Between Foraco International and Stria Lithium
Can any of the company-specific risk be diversified away by investing in both Foraco International and Stria Lithium 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 Foraco International and Stria Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foraco International SA and Stria Lithium, you can compare the effects of market volatilities on Foraco International and Stria Lithium 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 Foraco International with a short position of Stria Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foraco International and Stria Lithium.
Diversification Opportunities for Foraco International and Stria Lithium
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Foraco and Stria is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Foraco International SA and Stria Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stria Lithium and Foraco International 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 Foraco International SA are associated (or correlated) with Stria Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stria Lithium has no effect on the direction of Foraco International i.e., Foraco International and Stria Lithium go up and down completely randomly.
Pair Corralation between Foraco International and Stria Lithium
Assuming the 90 days trading horizon Foraco International SA is expected to generate 0.64 times more return on investment than Stria Lithium. However, Foraco International SA is 1.56 times less risky than Stria Lithium. It trades about -0.13 of its potential returns per unit of risk. Stria Lithium is currently generating about -0.12 per unit of risk. If you would invest 226.00 in Foraco International SA on November 28, 2024 and sell it today you would lose (34.00) from holding Foraco International SA or give up 15.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foraco International SA vs. Stria Lithium
Performance |
| Timeline |
| Foraco International |
| Stria Lithium |
Foraco International and Stria Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foraco International and Stria Lithium
The main advantage of trading using opposite Foraco International and Stria Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foraco International position performs unexpectedly, Stria Lithium 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 Stria Lithium will offset losses from the drop in Stria Lithium's long position.| Foraco International vs. Orbit Garant Drilling | Foraco International vs. Geodrill Limited | Foraco International vs. Mccoy Global | Foraco International vs. Bri Chem Corp |
| Stria Lithium vs. Silver Predator Corp | Stria Lithium vs. Stakeholder Gold Corp | Stria Lithium vs. ArcWest Exploration | Stria Lithium vs. Silver Range Resources |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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