Correlation Between Forum Energy and CSI Compressco

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

By analyzing existing cross correlation between Forum Energy Technologies and CSI Compressco LP, you can compare the effects of market volatilities on Forum Energy and CSI Compressco 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 CSI Compressco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and CSI Compressco.

Diversification Opportunities for Forum Energy and CSI Compressco

0.22

Correlation Coefficient

Forum Energy  CSI Compressco

Modest diversification

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

Pair Corralation between Forum Energy and CSI Compressco

If you would invest  111.00  in CSI Compressco LP on September 12, 2024 and sell it today you would earn a total of  0.00  from holding CSI Compressco LP or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.3%
Values	Daily Returns

Forum Energy Technologies  vs.  CSI Compressco LP

Forum Energy Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Forum Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

CSI Compressco LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSI Compressco LP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, CSI Compressco is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Forum Energy and CSI Compressco

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

The idea behind Forum Energy Technologies and CSI Compressco LP 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.