Correlation Between Filo Mining and Foraco International

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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

FiloForacoDiversified AwayFiloForacoDiversified Away100%
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 Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Filo Mining Corp  vs.  Foraco International SA

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 051015
JavaScript chart by amCharts 3.21.15FIL FAR
       Timeline  
Filo Mining Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Filo Mining Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Filo Mining is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec31.53232.533
Foraco International 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Foraco International SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Foraco International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.12.152.22.252.32.352.42.45

Filo Mining and Foraco International Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.07-0.78-0.49-0.2-0.01820.110.40.690.981.27 0.20.40.60.8
JavaScript chart by amCharts 3.21.15FIL FAR
       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.
The idea behind Filo Mining Corp and Foraco International SA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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