Correlation Between Forsys Metals and Biglari Holdings

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

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

Diversification Opportunities for Forsys Metals and Biglari Holdings

0.23

Correlation Coefficient

Forsys Metals  Biglari Holdings

Modest diversification

The 3 months correlation between Forsys and Biglari is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Biglari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biglari Holdings and Forsys Metals 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 Forsys Metals Corp are associated (or correlated) with Biglari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biglari Holdings has no effect on the direction of Forsys Metals i.e., Forsys Metals and Biglari Holdings go up and down completely randomly.

Pair Corralation between Forsys Metals and Biglari Holdings

Assuming the 90 days horizon Forsys Metals Corp is expected to generate 2.78 times more return on investment than Biglari Holdings. However, Forsys Metals is 2.78 times more volatile than Biglari Holdings. It trades about 0.01 of its potential returns per unit of risk. Biglari Holdings is currently generating about -0.08 per unit of risk. If you would invest  39.00  in Forsys Metals Corp on December 20, 2024 and sell it today you would lose (3.00) from holding Forsys Metals Corp or give up 7.69% of portfolio value over 90 days.

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

Forsys Metals Corp  vs.  Biglari Holdings

Forsys Metals Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Forsys Metals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Biglari Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Biglari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Forsys Metals and Biglari Holdings

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

The idea behind Forsys Metals Corp and Biglari Holdings 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.