Correlation Between Forum Energy and Pason Systems
Can any of the company-specific risk be diversified away by investing in both Forum Energy and Pason Systems 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 Pason Systems 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 Pason Systems, you can compare the effects of market volatilities on Forum Energy and Pason Systems 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 Pason Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and Pason Systems.
Diversification Opportunities for Forum Energy and Pason Systems
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Forum and Pason is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Pason Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pason Systems 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 Pason Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pason Systems has no effect on the direction of Forum Energy i.e., Forum Energy and Pason Systems go up and down completely randomly.
Pair Corralation between Forum Energy and Pason Systems
Assuming the 90 days horizon Forum Energy Metals is expected to under-perform the Pason Systems. In addition to that, Forum Energy is 3.65 times more volatile than Pason Systems. It trades about -0.06 of its total potential returns per unit of risk. Pason Systems is currently generating about -0.07 per unit of volatility. If you would invest 1,667 in Pason Systems on September 2, 2024 and sell it today you would lose (250.00) from holding Pason Systems or give up 15.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Forum Energy Metals vs. Pason Systems
Performance |
| Timeline |
| Forum Energy Metals |
| Pason Systems |
Forum Energy and Pason Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Forum Energy and Pason Systems
The main advantage of trading using opposite Forum Energy and Pason Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, Pason Systems 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 Pason Systems will offset losses from the drop in Pason Systems' long position.The idea behind Forum Energy Metals and Pason Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Pason Systems vs. Enerflex | Pason Systems vs. Mullen Group | Pason Systems vs. Secure Energy Services | Pason Systems vs. Ensign Energy Services |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |