Correlation Between High Arctic and Forum Energy
Can any of the company-specific risk be diversified away by investing in both High Arctic and Forum 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 High Arctic and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Arctic Energy and Forum Energy Metals, you can compare the effects of market volatilities on High Arctic and Forum 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 High Arctic with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of High Arctic and Forum Energy.
Diversification Opportunities for High Arctic and Forum Energy
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between High and Forum is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding High Arctic Energy and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals and High Arctic 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 High Arctic Energy are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of High Arctic i.e., High Arctic and Forum Energy go up and down completely randomly.
Pair Corralation between High Arctic and Forum Energy
Assuming the 90 days trading horizon High Arctic Energy is expected to generate 0.33 times more return on investment than Forum Energy. However, High Arctic Energy is 3.02 times less risky than Forum Energy. It trades about 0.06 of its potential returns per unit of risk. Forum Energy Metals is currently generating about -0.22 per unit of risk. If you would invest 112.00 in High Arctic Energy on September 2, 2024 and sell it today you would earn a total of 3.00 from holding High Arctic Energy or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
High Arctic Energy vs. Forum Energy Metals
Performance |
| Timeline |
| High Arctic Energy |
| Forum Energy Metals |
High Arctic and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with High Arctic and Forum Energy
The main advantage of trading using opposite High Arctic and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Arctic position performs unexpectedly, Forum 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 Forum Energy will offset losses from the drop in Forum Energy's long position.| High Arctic vs. CES Energy Solutions | High Arctic vs. Total Energy Services | High Arctic vs. PHX 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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