Correlation Between Forum Energy and CES Energy
Can any of the company-specific risk be diversified away by investing in both Forum Energy and CES 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 CES Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Energy Technologies and CES Energy Solutions, you can compare the effects of market volatilities on Forum Energy and CES 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 CES Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and CES Energy.
Diversification Opportunities for Forum Energy and CES Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Forum and CES is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and CES Energy Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CES Energy Solutions 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 Technologies are associated (or correlated) with CES Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CES Energy Solutions has no effect on the direction of Forum Energy i.e., Forum Energy and CES Energy go up and down completely randomly.
Pair Corralation between Forum Energy and CES Energy
Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the CES Energy. But the stock apears to be less risky and, when comparing its historical volatility, Forum Energy Technologies is 1.14 times less risky than CES Energy. The stock trades about 0.0 of its potential returns per unit of risk. The CES Energy Solutions is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 501.00 in CES Energy Solutions on September 3, 2024 and sell it today you would earn a total of 193.00 from holding CES Energy Solutions or generate 38.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Energy Technologies vs. CES Energy Solutions
Performance |
| Timeline |
| Forum Energy Technologies |
| CES Energy Solutions |
Forum Energy and CES Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and CES Energy
The main advantage of trading using opposite Forum Energy and CES Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, CES 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 CES Energy will offset losses from the drop in CES Energy's long position.| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
| CES Energy vs. Tamarack Valley Energy | CES Energy vs. Secure Energy Services | CES Energy vs. Caixabank SA ADR | CES Energy vs. High Arctic Energy |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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