Correlation Between Sigma Lithium and Foraco International
Can any of the company-specific risk be diversified away by investing in both Sigma Lithium and Foraco International 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 Sigma Lithium and Foraco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sigma Lithium Resources and Foraco International SA, you can compare the effects of market volatilities on Sigma Lithium and Foraco International 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 Sigma Lithium with a short position of Foraco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sigma Lithium and Foraco International.
Diversification Opportunities for Sigma Lithium and Foraco International
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sigma and Foraco is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sigma Lithium Resources and Foraco International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foraco International and Sigma Lithium 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 Sigma Lithium Resources are associated (or correlated) with Foraco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foraco International has no effect on the direction of Sigma Lithium i.e., Sigma Lithium and Foraco International go up and down completely randomly.
Pair Corralation between Sigma Lithium and Foraco International
Assuming the 90 days trading horizon Sigma Lithium Resources is expected to under-perform the Foraco International. In addition to that, Sigma Lithium is 1.57 times more volatile than Foraco International SA. It trades about -0.02 of its total potential returns per unit of risk. Foraco International SA is currently generating about 0.05 per unit of volatility. If you would invest 137.00 in Foraco International SA on September 14, 2024 and sell it today you would earn a total of 90.00 from holding Foraco International SA or generate 65.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sigma Lithium Resources vs. Foraco International SA
Performance |
| Timeline |
| Sigma Lithium Resources |
| Foraco International |
Sigma Lithium and Foraco International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sigma Lithium and Foraco International
The main advantage of trading using opposite Sigma Lithium and Foraco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sigma Lithium position performs unexpectedly, Foraco International 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 Foraco International will offset losses from the drop in Foraco International's long position.| Sigma Lithium vs. Foraco International SA | Sigma Lithium vs. Geodrill Limited | Sigma Lithium vs. Major Drilling Group | Sigma Lithium vs. Bri Chem Corp |
| Foraco International vs. Geodrill Limited | Foraco International vs. Major Drilling Group | Foraco International vs. Bri Chem Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |