Correlation Between Falcon Energy and BeMetals Corp

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

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

Diversification Opportunities for Falcon Energy and BeMetals Corp

0.12

Correlation Coefficient

Falcon Energy  BeMetals Corp

Average diversification

The 3 months correlation between Falcon and BeMetals is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Falcon Energy Materials and BeMetals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BeMetals Corp and Falcon 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 Falcon Energy Materials are associated (or correlated) with BeMetals Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeMetals Corp has no effect on the direction of Falcon Energy i.e., Falcon Energy and BeMetals Corp go up and down completely randomly.

Pair Corralation between Falcon Energy and BeMetals Corp

Assuming the 90 days trading horizon Falcon Energy Materials is expected to generate 0.69 times more return on investment than BeMetals Corp. However, Falcon Energy Materials is 1.46 times less risky than BeMetals Corp. It trades about -0.02 of its potential returns per unit of risk. BeMetals Corp is currently generating about -0.06 per unit of risk. If you would invest  68.00  in Falcon Energy Materials on October 3, 2024 and sell it today you would lose (8.00) from holding Falcon Energy Materials or give up 11.76% of portfolio value over 90 days.

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

Falcon Energy Materials  vs.  BeMetals Corp

Falcon Energy Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Falcon Energy Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Falcon Energy is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BeMetals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BeMetals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Falcon Energy and BeMetals Corp

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

The idea behind Falcon Energy Materials and BeMetals 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.