Correlation Between Forum Energy and Pulse Seismic

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

Diversification Opportunities for Forum Energy and Pulse Seismic

0.1

Correlation Coefficient

Forum Energy  Pulse Seismic

Average diversification

The 3 months correlation between Forum and Pulse is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and Pulse Seismic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulse Seismic 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 Pulse Seismic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulse Seismic has no effect on the direction of Forum Energy i.e., Forum Energy and Pulse Seismic go up and down completely randomly.

Pair Corralation between Forum Energy and Pulse Seismic

Considering the 90-day investment horizon Forum Energy Technologies is expected to generate 1.06 times more return on investment than Pulse Seismic. However, Forum Energy is 1.06 times more volatile than Pulse Seismic. It trades about 0.18 of its potential returns per unit of risk. Pulse Seismic is currently generating about 0.03 per unit of risk. If you would invest  1,486  in Forum Energy Technologies on October 6, 2024 and sell it today you would earn a total of  167.00  from holding Forum Energy Technologies or generate 11.24% return on investment over 90 days.

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

Forum Energy Technologies  vs.  Pulse Seismic

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pulse Seismic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Forum Energy and Pulse Seismic

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

The idea behind Forum Energy Technologies and Pulse Seismic 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.