Correlation Between American CuMo and Forum Energy
Can any of the company-specific risk be diversified away by investing in both American CuMo 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 American CuMo and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American CuMo Mining and Forum Energy Metals, you can compare the effects of market volatilities on American CuMo 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 American CuMo with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of American CuMo and Forum Energy.
Diversification Opportunities for American CuMo and Forum Energy
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Forum is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding American CuMo Mining 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 American CuMo 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 American CuMo Mining 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 American CuMo i.e., American CuMo and Forum Energy go up and down completely randomly.
Pair Corralation between American CuMo and Forum Energy
Assuming the 90 days horizon American CuMo Mining is expected to under-perform the Forum Energy. In addition to that, American CuMo is 1.45 times more volatile than Forum Energy Metals. It trades about -0.22 of its total potential returns per unit of risk. Forum Energy Metals is currently generating about -0.02 per unit of volatility. If you would invest 8.00 in Forum Energy Metals on August 29, 2024 and sell it today you would lose (1.25) from holding Forum Energy Metals or give up 15.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.96% |
| Values | Daily Returns |
American CuMo Mining vs. Forum Energy Metals
Performance |
| Timeline |
| American CuMo Mining |
| Forum Energy Metals |
American CuMo and Forum Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American CuMo and Forum Energy
The main advantage of trading using opposite American CuMo and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American CuMo 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.| American CuMo vs. Pasinex Resources Limited | American CuMo vs. Themac Resources Group | American CuMo vs. East Africa Metals | American CuMo vs. Forsys Metals Corp |
| Forum Energy vs. Namibia Critical Metals | Forum Energy vs. Themac Resources Group | Forum Energy vs. Pasinex Resources Limited | Forum Energy vs. NGEx Minerals |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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