Correlation Between Commander Resources and Forum Energy

Can any of the company-specific risk be diversified away by investing in both Commander Resources and Forum Energy 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 Commander Resources and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Commander Resources and Forum Energy

-0.33

Correlation Coefficient

Commander Resources  Forum Energy

Very good diversification

The 3 months correlation between Commander and Forum is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Commander Resources and Forum Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Metals and Commander Resources 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 Commander Resources are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Metals has no effect on the direction of Commander Resources i.e., Commander Resources and Forum Energy go up and down completely randomly.

Pair Corralation between Commander Resources and Forum Energy

Assuming the 90 days horizon Commander Resources is expected to generate 0.69 times more return on investment than Forum Energy. However, Commander Resources is 1.45 times less risky than Forum Energy. It trades about 0.01 of its potential returns per unit of risk. Forum Energy Metals is currently generating about 0.0 per unit of risk. If you would invest  5.90  in Commander Resources on September 4, 2024 and sell it today you would lose (0.90) from holding Commander Resources or give up 15.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Commander Resources  vs.  Forum Energy Metals

Commander Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Forum Energy Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Forum Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Commander Resources and Forum Energy

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

The idea behind Commander Resources and Forum Energy Metals 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.