Correlation Between Cymbria and Forsys Metals

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

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

Diversification Opportunities for Cymbria and Forsys Metals

-0.64

Correlation Coefficient

Cymbria  Forsys Metals

Excellent diversification

The 3 months correlation between Cymbria and Forsys is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cymbria 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 Cymbria 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 Cymbria 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 Cymbria i.e., Cymbria and Forsys Metals go up and down completely randomly.

Pair Corralation between Cymbria and Forsys Metals

Assuming the 90 days trading horizon Cymbria is expected to generate 1.64 times less return on investment than Forsys Metals. But when comparing it to its historical volatility, Cymbria is 4.85 times less risky than Forsys Metals. It trades about 0.05 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Forsys Metals Corp on December 23, 2024 and sell it today you would lose (3.00) from holding Forsys Metals Corp or give up 4.69% of portfolio value over 90 days.

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

Cymbria  vs.  Forsys Metals Corp

Cymbria

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cymbria are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Cymbria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Forsys Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Forsys Metals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cymbria and Forsys Metals

The main advantage of trading using opposite Cymbria and Forsys Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cymbria 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 Cymbria 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.