Correlation Between Forum Energy and Kutcho Copper

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

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

Diversification Opportunities for Forum Energy and Kutcho Copper

0.79

Correlation Coefficient

Forum Energy  Kutcho Copper

Poor diversification

The 3 months correlation between Forum and Kutcho is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Kutcho Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kutcho Copper Corp 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 Metals are associated (or correlated) with Kutcho Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kutcho Copper Corp has no effect on the direction of Forum Energy i.e., Forum Energy and Kutcho Copper go up and down completely randomly.

Pair Corralation between Forum Energy and Kutcho Copper

Assuming the 90 days horizon Forum Energy is expected to generate 1.34 times less return on investment than Kutcho Copper. In addition to that, Forum Energy is 1.95 times more volatile than Kutcho Copper Corp. It trades about 0.04 of its total potential returns per unit of risk. Kutcho Copper Corp is currently generating about 0.09 per unit of volatility. If you would invest  9.50  in Kutcho Copper Corp on October 8, 2024 and sell it today you would earn a total of  0.50  from holding Kutcho Copper Corp or generate 5.26% return on investment over 90 days.

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

Forum Energy Metals  vs.  Kutcho Copper Corp

Forum Energy Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forum Energy Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Kutcho Copper Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kutcho Copper 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 basic 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 Forum Energy and Kutcho Copper

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

The idea behind Forum Energy Metals and Kutcho Copper 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.