Correlation Between Forsys Metals and Kingspan Group

Can any of the company-specific risk be diversified away by investing in both Forsys Metals and Kingspan Group 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 Kingspan Group 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 Kingspan Group plc, you can compare the effects of market volatilities on Forsys Metals and Kingspan Group 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 Kingspan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forsys Metals and Kingspan Group.

Diversification Opportunities for Forsys Metals and Kingspan Group

-0.3

Correlation Coefficient

Forsys Metals  Kingspan Group

Very good diversification

The 3 months correlation between Forsys and Kingspan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Kingspan Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingspan Group plc 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 Kingspan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingspan Group plc has no effect on the direction of Forsys Metals i.e., Forsys Metals and Kingspan Group go up and down completely randomly.

Pair Corralation between Forsys Metals and Kingspan Group

Assuming the 90 days horizon Forsys Metals Corp is expected to under-perform the Kingspan Group. In addition to that, Forsys Metals is 2.65 times more volatile than Kingspan Group plc. It trades about -0.01 of its total potential returns per unit of risk. Kingspan Group plc is currently generating about 0.12 per unit of volatility. If you would invest  6,920  in Kingspan Group plc on December 21, 2024 and sell it today you would earn a total of  1,385  from holding Kingspan Group plc or generate 20.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Forsys Metals Corp  vs.  Kingspan Group plc

Forsys Metals Corp

Risk-Adjusted Performance

Very Weak

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

Kingspan Group plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kingspan Group plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Kingspan Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forsys Metals and Kingspan Group

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

The idea behind Forsys Metals Corp and Kingspan Group plc 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 Anywhere module to track or share privately all of your investments from the convenience of any device.