Correlation Between Fidus Investment and Forsys Metals

Can any of the company-specific risk be diversified away by investing in both Fidus Investment and Forsys Metals 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 Fidus Investment and Forsys Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Fidus Investment and Forsys Metals

-0.22

Correlation Coefficient

Fidus Investment  Forsys Metals

Very good diversification

The 3 months correlation between Fidus and Forsys is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp and Fidus Investment 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 Fidus Investment Corp are associated (or correlated) with Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Fidus Investment i.e., Fidus Investment and Forsys Metals go up and down completely randomly.

Pair Corralation between Fidus Investment and Forsys Metals

Given the investment horizon of 90 days Fidus Investment is expected to generate 2.24 times less return on investment than Forsys Metals. But when comparing it to its historical volatility, Fidus Investment Corp is 5.51 times less risky than Forsys Metals. It trades about 0.07 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Forsys Metals Corp on September 20, 2024 and sell it today you would earn a total of  4.00  from holding Forsys Metals Corp or generate 11.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fidus Investment Corp  vs.  Forsys Metals Corp

Fidus Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Forsys Metals Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Forsys Metals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fidus Investment and Forsys Metals

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

The idea behind Fidus Investment Corp and Forsys Metals Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.