Correlation Between Forum Energy and Kraken Energy
Can any of the company-specific risk be diversified away by investing in both Forum Energy and Kraken Energy 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 Forum Energy and Kraken Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Energy Metals and Kraken Energy Corp, you can compare the effects of market volatilities on Forum Energy and Kraken Energy 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 Forum Energy with a short position of Kraken Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and Kraken Energy.
Diversification Opportunities for Forum Energy and Kraken Energy
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Forum and Kraken is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Kraken Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kraken Energy Corp and Forum Energy 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 Forum Energy Metals are associated (or correlated) with Kraken Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kraken Energy Corp has no effect on the direction of Forum Energy i.e., Forum Energy and Kraken Energy go up and down completely randomly.
Pair Corralation between Forum Energy and Kraken Energy
Assuming the 90 days horizon Forum Energy Metals is expected to generate 1.68 times more return on investment than Kraken Energy. However, Forum Energy is 1.68 times more volatile than Kraken Energy Corp. It trades about -0.02 of its potential returns per unit of risk. Kraken Energy Corp is currently generating about -0.2 per unit of risk. If you would invest 8.00 in Forum Energy Metals on August 29, 2024 and sell it today you would lose (1.25) from holding Forum Energy Metals or give up 15.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Energy Metals vs. Kraken Energy Corp
Performance |
| Timeline |
| Forum Energy Metals |
| Kraken Energy Corp |
Forum Energy and Kraken Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and Kraken Energy
The main advantage of trading using opposite Forum Energy and Kraken Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, Kraken Energy 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 Kraken Energy will offset losses from the drop in Kraken Energy's long position.| Forum Energy vs. Petroleo Brasileiro Petrobras | Forum Energy vs. Equinor ASA ADR | Forum Energy vs. Eni SpA ADR | Forum Energy vs. YPF Sociedad Anonima |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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