Correlation Between Forsys Metals and SFL

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

Diversification Opportunities for Forsys Metals and SFL

0.36

Correlation Coefficient

Forsys Metals  SFL

Weak diversification

The 3 months correlation between Forsys and SFL is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Forsys Metals i.e., Forsys Metals and SFL go up and down completely randomly.

Pair Corralation between Forsys Metals and SFL

Assuming the 90 days horizon Forsys Metals Corp is expected to generate 3.29 times more return on investment than SFL. However, Forsys Metals is 3.29 times more volatile than SFL Corporation. It trades about 0.02 of its potential returns per unit of risk. SFL Corporation is currently generating about 0.02 per unit of risk. If you would invest  33.00  in Forsys Metals Corp on December 4, 2024 and sell it today you would lose (5.00) from holding Forsys Metals Corp or give up 15.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Forsys Metals Corp  vs.  SFL Corp.

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.

SFL Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Forsys Metals and SFL

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

The idea behind Forsys Metals Corp and SFL Corporation 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.