Correlation Between Filo Mining and Foraco International
Can any of the company-specific risk be diversified away by investing in both Filo Mining and Foraco International 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 Filo Mining and Foraco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Filo Mining Corp and Foraco International SA, you can compare the effects of market volatilities on Filo Mining and Foraco International 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 Filo Mining with a short position of Foraco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Filo Mining and Foraco International.
Diversification Opportunities for Filo Mining and Foraco International
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Filo and Foraco is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Filo Mining Corp and Foraco International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foraco International and Filo Mining 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 Filo Mining Corp are associated (or correlated) with Foraco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foraco International has no effect on the direction of Filo Mining i.e., Filo Mining and Foraco International go up and down completely randomly.
Pair Corralation between Filo Mining and Foraco International
Assuming the 90 days trading horizon Filo Mining Corp is expected to under-perform the Foraco International. But the stock apears to be less risky and, when comparing its historical volatility, Filo Mining Corp is 4.19 times less risky than Foraco International. The stock trades about -0.02 of its potential returns per unit of risk. The Foraco International SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 221.00 in Foraco International SA on September 24, 2024 and sell it today you would earn a total of 4.00 from holding Foraco International SA or generate 1.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Filo Mining Corp vs. Foraco International SA
Performance |
Timeline |
Filo Mining Corp |
Foraco International |
Filo Mining and Foraco International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Filo Mining and Foraco International
The main advantage of trading using opposite Filo Mining and Foraco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Filo Mining position performs unexpectedly, Foraco International 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 Foraco International will offset losses from the drop in Foraco International's long position.Filo Mining vs. Monarca Minerals | ||
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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