Correlation Between Champion Bear and Foraco International

Can any of the company-specific risk be diversified away by investing in both Champion Bear and Foraco International 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 Champion Bear and Foraco International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champion Bear Resources and Foraco International SA, you can compare the effects of market volatilities on Champion Bear and Foraco International 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 Champion Bear with a short position of Foraco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champion Bear and Foraco International.

Diversification Opportunities for Champion Bear and Foraco International

-0.24

Correlation Coefficient

Champion Bear  Foraco International

Very good diversification

The 3 months correlation between Champion and Foraco is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Champion Bear Resources and Foraco International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foraco International and Champion Bear 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 Champion Bear Resources are associated (or correlated) with Foraco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foraco International has no effect on the direction of Champion Bear i.e., Champion Bear and Foraco International go up and down completely randomly.

Pair Corralation between Champion Bear and Foraco International

Assuming the 90 days horizon Champion Bear Resources is expected to under-perform the Foraco International. In addition to that, Champion Bear is 3.92 times more volatile than Foraco International SA. It trades about -0.28 of its total potential returns per unit of risk. Foraco International SA is currently generating about 0.07 per unit of volatility. If you would invest  217.00  in Foraco International SA on September 18, 2024 and sell it today you would earn a total of  8.00  from holding Foraco International SA or generate 3.69% return on investment over 90 days.

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

Champion Bear Resources  vs.  Foraco International SA

Champion Bear Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champion Bear Resources 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.

Foraco International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Foraco International SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Foraco International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champion Bear and Foraco International

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

The idea behind Champion Bear Resources and Foraco International SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.