Correlation Between Forsys Metals and Carmat SA

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

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

Diversification Opportunities for Forsys Metals and Carmat SA

0.23

Correlation Coefficient

Forsys Metals  Carmat SA

Modest diversification

The 3 months correlation between Forsys and Carmat is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Carmat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carmat SA and Forsys Metals 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 Forsys Metals Corp are associated (or correlated) with Carmat SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carmat SA has no effect on the direction of Forsys Metals i.e., Forsys Metals and Carmat SA go up and down completely randomly.

Pair Corralation between Forsys Metals and Carmat SA

Assuming the 90 days horizon Forsys Metals Corp is expected to generate 0.94 times more return on investment than Carmat SA. However, Forsys Metals Corp is 1.06 times less risky than Carmat SA. It trades about 0.02 of its potential returns per unit of risk. Carmat SA is currently generating about 0.0 per unit of risk. If you would invest  46.00  in Forsys Metals Corp on October 8, 2024 and sell it today you would earn a total of  0.00  from holding Forsys Metals Corp or generate 0.0% return on investment over 90 days.

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

Forsys Metals Corp  vs.  Carmat SA

Forsys Metals Corp

Risk-Adjusted Performance

1 of 100

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. Despite nearly stable basic indicators, Forsys Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Carmat SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Forsys Metals and Carmat SA

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

The idea behind Forsys Metals Corp and Carmat 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.