Correlation Between Forum Energy and Commander Resources

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

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

Diversification Opportunities for Forum Energy and Commander Resources

-0.33

Correlation Coefficient

Forum Energy  Commander Resources

Very good diversification

The 3 months correlation between Forum and Commander is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Commander Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commander Resources and Forum Energy 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 Forum Energy Metals are associated (or correlated) with Commander Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commander Resources has no effect on the direction of Forum Energy i.e., Forum Energy and Commander Resources go up and down completely randomly.

Pair Corralation between Forum Energy and Commander Resources

Assuming the 90 days horizon Forum Energy Metals is expected to generate 2.78 times more return on investment than Commander Resources. However, Forum Energy is 2.78 times more volatile than Commander Resources. It trades about 0.01 of its potential returns per unit of risk. Commander Resources is currently generating about -0.02 per unit of risk. If you would invest  6.00  in Forum Energy Metals on September 4, 2024 and sell it today you would lose (1.00) from holding Forum Energy Metals or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Forum Energy Metals  vs.  Commander Resources

Forum Energy Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, Forum Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Commander Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Forum Energy and Commander Resources

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

The idea behind Forum Energy Metals and Commander 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.