Correlation Between Forum Energy and Mega Uranium

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

Diversification Opportunities for Forum Energy and Mega Uranium

0.06

Correlation Coefficient

Forum Energy  Mega Uranium

Significant diversification

The 3 months correlation between Forum and Mega is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Mega Uranium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega 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 Mega Uranium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Uranium has no effect on the direction of Forum Energy i.e., Forum Energy and Mega Uranium go up and down completely randomly.

Pair Corralation between Forum Energy and Mega Uranium

Assuming the 90 days horizon Forum Energy is expected to generate 2.07 times less return on investment than Mega Uranium. In addition to that, Forum Energy is 1.38 times more volatile than Mega Uranium. It trades about 0.02 of its total potential returns per unit of risk. Mega Uranium is currently generating about 0.05 per unit of volatility. If you would invest  19.00  in Mega Uranium on September 14, 2024 and sell it today you would earn a total of  16.00  from holding Mega Uranium or generate 84.21% return on investment over 90 days.

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

Forum Energy Metals  vs.  Mega 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. 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.

Mega Uranium

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mega Uranium are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Mega Uranium displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forum Energy and Mega Uranium

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

The idea behind Forum Energy Metals and Mega 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.