Correlation Between Forian and Cogstate

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

By analyzing existing cross correlation between Forian Inc and Cogstate Limited, you can compare the effects of market volatilities on Forian and Cogstate 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 Forian with a short position of Cogstate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forian and Cogstate.

Diversification Opportunities for Forian and Cogstate

-0.48

Correlation Coefficient

Forian  Cogstate

Very good diversification

The 3 months correlation between Forian and Cogstate is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Forian Inc and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and Forian 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 Forian Inc are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Forian i.e., Forian and Cogstate go up and down completely randomly.

Pair Corralation between Forian and Cogstate

Given the investment horizon of 90 days Forian Inc is expected to generate 0.5 times more return on investment than Cogstate. However, Forian Inc is 1.99 times less risky than Cogstate. It trades about 0.09 of its potential returns per unit of risk. Cogstate Limited is currently generating about -0.09 per unit of risk. If you would invest  201.00  in Forian Inc on October 7, 2024 and sell it today you would earn a total of  6.00  from holding Forian Inc or generate 2.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Forian Inc  vs.  Cogstate Limited

Forian Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forian Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Forian is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Cogstate Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Forian and Cogstate

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

The idea behind Forian Inc and Cogstate Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.