Correlation Between Forum Energy and Profire Ene
Can any of the company-specific risk be diversified away by investing in both Forum Energy and Profire Ene 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 Profire Ene 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 Profire Ene, you can compare the effects of market volatilities on Forum Energy and Profire Ene 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 Profire Ene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and Profire Ene.
Diversification Opportunities for Forum Energy and Profire Ene
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Forum and Profire is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and Profire Ene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profire Ene 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 Profire Ene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profire Ene has no effect on the direction of Forum Energy i.e., Forum Energy and Profire Ene go up and down completely randomly.
Pair Corralation between Forum Energy and Profire Ene
Considering the 90-day investment horizon Forum Energy Technologies is expected to under-perform the Profire Ene. But the stock apears to be less risky and, when comparing its historical volatility, Forum Energy Technologies is 1.67 times less risky than Profire Ene. The stock trades about -0.04 of its potential returns per unit of risk. The Profire Ene is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 116.00 in Profire Ene on August 28, 2024 and sell it today you would earn a total of 135.00 from holding Profire Ene or generate 116.38% 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. Profire Ene
Performance |
| Timeline |
| Forum Energy Technologies |
| Profire Ene |
Forum Energy and Profire Ene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and Profire Ene
The main advantage of trading using opposite Forum Energy and Profire Ene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, Profire Ene 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 Profire Ene will offset losses from the drop in Profire Ene's long position.| Forum Energy vs. ProPetro Holding Corp | Forum Energy vs. RPC Inc | Forum Energy vs. MRC Global | Forum Energy vs. Expro Group Holdings |
| Profire Ene vs. Enservco Co | Profire Ene vs. Nine Energy Service | Profire Ene vs. Enerflex | Profire Ene vs. Geospace Technologies |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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