Correlation Between Chibougamau Independent and Forsys Metals

Can any of the company-specific risk be diversified away by investing in both Chibougamau Independent and Forsys Metals 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 Chibougamau Independent and Forsys Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chibougamau Independent Mines and Forsys Metals Corp, you can compare the effects of market volatilities on Chibougamau Independent and Forsys Metals 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 Chibougamau Independent with a short position of Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chibougamau Independent and Forsys Metals.

Diversification Opportunities for Chibougamau Independent and Forsys Metals

-0.53

Correlation Coefficient

Chibougamau Independent  Forsys Metals

Excellent diversification

The 3 months correlation between Chibougamau and Forsys is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chibougamau Independent Mines and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp and Chibougamau Independent 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 Chibougamau Independent Mines are associated (or correlated) with Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Chibougamau Independent i.e., Chibougamau Independent and Forsys Metals go up and down completely randomly.

Pair Corralation between Chibougamau Independent and Forsys Metals

Assuming the 90 days horizon Chibougamau Independent Mines is expected to generate 1.06 times more return on investment than Forsys Metals. However, Chibougamau Independent is 1.06 times more volatile than Forsys Metals Corp. It trades about 0.13 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about -0.08 per unit of risk. If you would invest  10.00  in Chibougamau Independent Mines on September 27, 2024 and sell it today you would earn a total of  4.00  from holding Chibougamau Independent Mines or generate 40.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chibougamau Independent Mines  vs.  Forsys Metals Corp

Chibougamau Independent

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chibougamau Independent Mines are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chibougamau Independent showed solid returns over the last few months and may actually be approaching a breakup point.

Forsys Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forsys Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Chibougamau Independent and Forsys Metals

The main advantage of trading using opposite Chibougamau Independent and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chibougamau Independent position performs unexpectedly, Forsys Metals 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 Forsys Metals will offset losses from the drop in Forsys Metals' long position.

The idea behind Chibougamau Independent Mines and Forsys Metals Corp 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.