Correlation Between Forum Energy and Pasinex Resources

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

Diversification Opportunities for Forum Energy and Pasinex Resources

0.0

Correlation Coefficient

Forum Energy  Pasinex Resources

Pay attention - limited upside

The 3 months correlation between Forum and Pasinex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Pasinex Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pasinex 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 Pasinex Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pasinex Resources has no effect on the direction of Forum Energy i.e., Forum Energy and Pasinex Resources go up and down completely randomly.

Pair Corralation between Forum Energy and Pasinex Resources

Assuming the 90 days horizon Forum Energy is expected to generate 4.64 times less return on investment than Pasinex Resources. But when comparing it to its historical volatility, Forum Energy Metals is 2.76 times less risky than Pasinex Resources. It trades about 0.03 of its potential returns per unit of risk. Pasinex Resources Limited is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Pasinex Resources Limited on December 2, 2024 and sell it today you would earn a total of  0.40  from holding Pasinex Resources Limited or generate 500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Forum Energy Metals  vs.  Pasinex Resources Limited

Forum Energy Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Forum Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile technical and fundamental indicators, Forum Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pasinex Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pasinex Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Pasinex 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 Pasinex Resources

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

The idea behind Forum Energy Metals and Pasinex Resources Limited 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.

Check out your portfolio center.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.