Correlation Between Forum Energy and CanAlaska Uranium

Can any of the company-specific risk be diversified away by investing in both Forum Energy and CanAlaska Uranium 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 CanAlaska Uranium 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 CanAlaska Uranium, you can compare the effects of market volatilities on Forum Energy and CanAlaska Uranium 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 CanAlaska Uranium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and CanAlaska Uranium.

Diversification Opportunities for Forum Energy and CanAlaska Uranium

0.15

Correlation Coefficient

Forum Energy  CanAlaska Uranium

Average diversification

The 3 months correlation between Forum and CanAlaska is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and CanAlaska Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanAlaska Uranium 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 CanAlaska Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanAlaska Uranium has no effect on the direction of Forum Energy i.e., Forum Energy and CanAlaska Uranium go up and down completely randomly.

Pair Corralation between Forum Energy and CanAlaska Uranium

Assuming the 90 days horizon Forum Energy is expected to generate 1.83 times less return on investment than CanAlaska Uranium. In addition to that, Forum Energy is 2.81 times more volatile than CanAlaska Uranium. It trades about 0.0 of its total potential returns per unit of risk. CanAlaska Uranium is currently generating about 0.02 per unit of volatility. If you would invest  52.00  in CanAlaska Uranium on September 12, 2024 and sell it today you would earn a total of  1.00  from holding CanAlaska Uranium or generate 1.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Forum Energy Metals  vs.  CanAlaska Uranium

Forum Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forum Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Forum Energy is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CanAlaska Uranium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CanAlaska Uranium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CanAlaska Uranium is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Forum Energy and CanAlaska Uranium

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

The idea behind Forum Energy Metals and CanAlaska Uranium 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 CEOs Directory module to screen CEOs from public companies around the world.