Correlation Between Forsys Metals and Themac Resources

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

Diversification Opportunities for Forsys Metals and Themac Resources

-0.8

Correlation Coefficient

Forsys Metals  Themac Resources

Pay attention - limited upside

The 3 months correlation between Forsys and Themac is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Forsys Metals i.e., Forsys Metals and Themac Resources go up and down completely randomly.

Pair Corralation between Forsys Metals and Themac Resources

Assuming the 90 days horizon Forsys Metals is expected to generate 5.31 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Forsys Metals Corp is 2.46 times less risky than Themac Resources. It trades about 0.03 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6.00  in Themac Resources Group on December 2, 2024 and sell it today you would earn a total of  2.10  from holding Themac Resources Group or generate 35.0% return on investment over 90 days.

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

Forsys Metals Corp  vs.  Themac Resources Group

Forsys Metals Corp

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Themac Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Themac Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forsys Metals and Themac Resources

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

The idea behind Forsys Metals Corp and Themac Resources 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.

Check out your portfolio center.

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.