Correlation Between Eros Resources and Forstrong Global

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

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

Diversification Opportunities for Eros Resources and Forstrong Global

0.53

Correlation Coefficient

Eros Resources  Forstrong Global

Very weak diversification

The 3 months correlation between Eros and Forstrong is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Eros Resources Corp and Forstrong Global Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forstrong Global Income and Eros 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 Eros Resources Corp are associated (or correlated) with Forstrong Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forstrong Global Income has no effect on the direction of Eros Resources i.e., Eros Resources and Forstrong Global go up and down completely randomly.

Pair Corralation between Eros Resources and Forstrong Global

Assuming the 90 days horizon Eros Resources Corp is expected to under-perform the Forstrong Global. In addition to that, Eros Resources is 23.99 times more volatile than Forstrong Global Income. It trades about -0.01 of its total potential returns per unit of risk. Forstrong Global Income is currently generating about 0.01 per unit of volatility. If you would invest  2,159  in Forstrong Global Income on August 31, 2024 and sell it today you would earn a total of  3.00  from holding Forstrong Global Income or generate 0.14% return on investment over 90 days.

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

Eros Resources Corp  vs.  Forstrong Global Income

Eros Resources Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Eros Resources Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eros Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Forstrong Global Income

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forstrong Global Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Forstrong Global is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Eros Resources and Forstrong Global

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

The idea behind Eros Resources Corp and Forstrong Global Income 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.