Correlation Between Forsys Metals and Plug Power

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

Diversification Opportunities for Forsys Metals and Plug Power

0.08

Correlation Coefficient

Forsys Metals  Plug Power

Significant diversification

The 3 months correlation between Forsys and Plug is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power 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 Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Forsys Metals i.e., Forsys Metals and Plug Power go up and down completely randomly.

Pair Corralation between Forsys Metals and Plug Power

Assuming the 90 days horizon Forsys Metals Corp is expected to generate 0.7 times more return on investment than Plug Power. However, Forsys Metals Corp is 1.42 times less risky than Plug Power. It trades about 0.03 of its potential returns per unit of risk. Plug Power is currently generating about -0.06 per unit of risk. If you would invest  36.00  in Forsys Metals Corp on October 26, 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Forsys Metals Corp  vs.  Plug Power

Forsys Metals Corp

Risk-Adjusted Performance

0 of 100

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Plug Power

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Plug Power exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forsys Metals and Plug Power

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

The idea behind Forsys Metals Corp and Plug Power 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..