Correlation Between Forum Energy and Cameco Corp

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

Diversification Opportunities for Forum Energy and Cameco Corp

-0.04

Correlation Coefficient

Forum Energy  Cameco Corp

Good diversification

The 3 months correlation between Forum and Cameco is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Cameco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cameco Corp 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 Cameco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cameco Corp has no effect on the direction of Forum Energy i.e., Forum Energy and Cameco Corp go up and down completely randomly.

Pair Corralation between Forum Energy and Cameco Corp

Assuming the 90 days horizon Forum Energy Metals is expected to under-perform the Cameco Corp. In addition to that, Forum Energy is 2.63 times more volatile than Cameco Corp. It trades about -0.03 of its total potential returns per unit of risk. Cameco Corp is currently generating about 0.25 per unit of volatility. If you would invest  5,503  in Cameco Corp on September 14, 2024 and sell it today you would earn a total of  2,466  from holding Cameco Corp or generate 44.81% return on investment over 90 days.

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

Forum Energy Metals  vs.  Cameco Corp

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. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Cameco Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cameco Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cameco Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forum Energy and Cameco Corp

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

The idea behind Forum Energy Metals and Cameco 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.