Correlation Between Foraco International and Orex Minerals

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

Diversification Opportunities for Foraco International and Orex Minerals

-0.34

Correlation Coefficient

Foraco International  Orex Minerals

Very good diversification

The 3 months correlation between Foraco and Orex is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Foraco International SA and Orex Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orex Minerals 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 Orex Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orex Minerals has no effect on the direction of Foraco International i.e., Foraco International and Orex Minerals go up and down completely randomly.

Pair Corralation between Foraco International and Orex Minerals

Assuming the 90 days trading horizon Foraco International SA is expected to generate 0.51 times more return on investment than Orex Minerals. However, Foraco International SA is 1.96 times less risky than Orex Minerals. It trades about 0.1 of its potential returns per unit of risk. Orex Minerals is currently generating about -0.2 per unit of risk. If you would invest  222.00  in Foraco International SA on September 13, 2024 and sell it today you would earn a total of  12.00  from holding Foraco International SA or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Foraco International SA  vs.  Orex Minerals

Foraco International

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Foraco International SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Foraco International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Orex Minerals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orex Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Foraco International and Orex Minerals

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

The idea behind Foraco International SA and Orex Minerals 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.