Correlation Between Forum Energy and High Arctic
Can any of the company-specific risk be diversified away by investing in both Forum Energy and High Arctic 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 High Arctic 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 High Arctic Energy, you can compare the effects of market volatilities on Forum Energy and High Arctic 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 High Arctic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and High Arctic.
Diversification Opportunities for Forum Energy and High Arctic
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Forum and High is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and High Arctic Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Arctic Energy 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 High Arctic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Arctic Energy has no effect on the direction of Forum Energy i.e., Forum Energy and High Arctic go up and down completely randomly.
Pair Corralation between Forum Energy and High Arctic
Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the High Arctic. But the stock apears to be less risky and, when comparing its historical volatility, Forum Energy Technologies is 16.3 times less risky than High Arctic. The stock trades about 0.0 of its potential returns per unit of risk. The High Arctic Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 283.00 in High Arctic Energy on September 3, 2024 and sell it today you would lose (202.00) from holding High Arctic Energy or give up 71.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Forum Energy Technologies vs. High Arctic Energy
Performance |
| Timeline |
| Forum Energy Technologies |
| High Arctic Energy |
Forum Energy and High Arctic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and High Arctic
The main advantage of trading using opposite Forum Energy and High Arctic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, High Arctic 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 High Arctic will offset losses from the drop in High Arctic's long position.| Forum Energy vs. Natural Gas Services | Forum Energy vs. Enerflex | Forum Energy vs. Now Inc | Forum Energy vs. Newpark Resources |
| High Arctic vs. Seadrill Limited | High Arctic vs. Noble plc | High Arctic vs. Borr Drilling | High Arctic vs. SCOR PK |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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