Correlation Between Forsys Metals and GEN Restaurant

Can any of the company-specific risk be diversified away by investing in both Forsys Metals and GEN Restaurant 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 GEN Restaurant 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 GEN Restaurant Group,, you can compare the effects of market volatilities on Forsys Metals and GEN Restaurant 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 GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forsys Metals and GEN Restaurant.

Diversification Opportunities for Forsys Metals and GEN Restaurant

-0.07

Correlation Coefficient

Forsys Metals  GEN Restaurant

Good diversification

The 3 months correlation between Forsys and GEN is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, 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 GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Forsys Metals i.e., Forsys Metals and GEN Restaurant go up and down completely randomly.

Pair Corralation between Forsys Metals and GEN Restaurant

Assuming the 90 days horizon Forsys Metals Corp is expected to under-perform the GEN Restaurant. In addition to that, Forsys Metals is 1.28 times more volatile than GEN Restaurant Group,. It trades about -0.24 of its total potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.04 per unit of volatility. If you would invest  777.00  in GEN Restaurant Group, on September 23, 2024 and sell it today you would lose (24.00) from holding GEN Restaurant Group, or give up 3.09% of portfolio value over 90 days.

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

Forsys Metals Corp  vs.  GEN Restaurant Group,

Forsys Metals Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forsys Metals Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Forsys Metals and GEN Restaurant

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

The idea behind Forsys Metals Corp and GEN Restaurant Group, 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.