Correlation Between Forsys Metals and PT Semen

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

Diversification Opportunities for Forsys Metals and PT Semen

0.86

Correlation Coefficient

Forsys Metals  PT Semen

Very poor diversification

The 3 months correlation between Forsys and PSGTF is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and PT Semen Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Semen Indonesia 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 PT Semen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Semen Indonesia has no effect on the direction of Forsys Metals i.e., Forsys Metals and PT Semen go up and down completely randomly.

Pair Corralation between Forsys Metals and PT Semen

Assuming the 90 days horizon Forsys Metals Corp is expected to generate 3.95 times more return on investment than PT Semen. However, Forsys Metals is 3.95 times more volatile than PT Semen Indonesia. It trades about 0.01 of its potential returns per unit of risk. PT Semen Indonesia is currently generating about -0.13 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	Strong
Accuracy	100.0%
Values	Daily Returns

Forsys Metals Corp  vs.  PT Semen Indonesia

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.

PT Semen Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Semen Indonesia 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 April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Forsys Metals and PT Semen

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

The idea behind Forsys Metals Corp and PT Semen Indonesia 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.