Correlation Between Blue Moon and Forsys Metals

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

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

Diversification Opportunities for Blue Moon and Forsys Metals

-0.24

Correlation Coefficient

Blue Moon  Forsys Metals

Very good diversification

The 3 months correlation between Blue and Forsys is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals 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 Blue Moon 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 Blue Moon Metals 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 Blue Moon i.e., Blue Moon and Forsys Metals go up and down completely randomly.

Pair Corralation between Blue Moon and Forsys Metals

Assuming the 90 days horizon Blue Moon Metals is expected to generate 18.89 times more return on investment than Forsys Metals. However, Blue Moon is 18.89 times more volatile than Forsys Metals Corp. It trades about 0.1 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about 0.03 per unit of risk. If you would invest  11.00  in Blue Moon Metals on September 21, 2024 and sell it today you would earn a total of  14.00  from holding Blue Moon Metals or generate 127.27% return on investment over 90 days.

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

Blue Moon Metals  vs.  Forsys Metals Corp

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Forsys Metals Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Forsys Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Blue Moon and Forsys Metals

The main advantage of trading using opposite Blue Moon and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Moon 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 Blue Moon Metals 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.