Correlation Between Foraco International and Nubian Resources

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

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

Diversification Opportunities for Foraco International and Nubian Resources

0.14

Correlation Coefficient

Foraco International  Nubian Resources

Average diversification

The 3 months correlation between Foraco and Nubian is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Foraco International SA and Nubian Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nubian Resources and Foraco International 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 Foraco International SA are associated (or correlated) with Nubian Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nubian Resources has no effect on the direction of Foraco International i.e., Foraco International and Nubian Resources go up and down completely randomly.

Pair Corralation between Foraco International and Nubian Resources

If you would invest (100.00) in Nubian Resources on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Nubian Resources or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Foraco International SA  vs.  Nubian Resources

Foraco International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Foraco International SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Nubian Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nubian Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nubian Resources is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Foraco International and Nubian Resources

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

The idea behind Foraco International SA and Nubian Resources 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.