Correlation Between Forum Energy and Themac Resources

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

Diversification Opportunities for Forum Energy and Themac Resources

0.29

Correlation Coefficient

Forum Energy  Themac Resources

Modest diversification

The 3 months correlation between Forum and Themac is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Forum Energy i.e., Forum Energy and Themac Resources go up and down completely randomly.

Pair Corralation between Forum Energy and Themac Resources

Assuming the 90 days horizon Forum Energy Metals is expected to under-perform the Themac Resources. But the otc stock apears to be less risky and, when comparing its historical volatility, Forum Energy Metals is 2.69 times less risky than Themac Resources. The otc stock trades about -0.01 of its potential returns per unit of risk. The Themac Resources Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.30  in Themac Resources Group on September 3, 2024 and sell it today you would earn a total of  1.90  from holding Themac Resources Group or generate 82.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Forum Energy Metals  vs.  Themac Resources Group

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 fragile technical and fundamental indicators, Forum Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Themac Resources

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Forum Energy and Themac Resources

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

The idea behind Forum Energy Metals and Themac Resources Group 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.