Correlation Between Forza Petroleum and Maiden Holdings

Can any of the company-specific risk be diversified away by investing in both Forza Petroleum and Maiden Holdings 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 Forza Petroleum and Maiden Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Forza Petroleum Limited and Maiden Holdings, you can compare the effects of market volatilities on Forza Petroleum and Maiden Holdings 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 Forza Petroleum with a short position of Maiden Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forza Petroleum and Maiden Holdings.

Diversification Opportunities for Forza Petroleum and Maiden Holdings

0.0

Correlation Coefficient

Forza Petroleum  Maiden Holdings

Pay attention - limited upside

The 3 months correlation between Forza and Maiden is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Forza Petroleum Limited and Maiden Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maiden Holdings and Forza Petroleum 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 Forza Petroleum Limited are associated (or correlated) with Maiden Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maiden Holdings has no effect on the direction of Forza Petroleum i.e., Forza Petroleum and Maiden Holdings go up and down completely randomly.

Pair Corralation between Forza Petroleum and Maiden Holdings

If you would invest  14.00  in Forza Petroleum Limited on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Forza Petroleum Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Forza Petroleum Limited  vs.  Maiden Holdings

Forza Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

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

Maiden Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maiden Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Maiden Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Forza Petroleum and Maiden Holdings

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

The idea behind Forza Petroleum Limited and Maiden Holdings 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.