Correlation Between Forsys Metals and Lupaka Gold

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

Diversification Opportunities for Forsys Metals and Lupaka Gold

0.44

Correlation Coefficient

Forsys Metals  Lupaka Gold

Very weak diversification

The 3 months correlation between Forsys and Lupaka is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Lupaka Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupaka Gold Corp 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 Lupaka Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupaka Gold Corp has no effect on the direction of Forsys Metals i.e., Forsys Metals and Lupaka Gold go up and down completely randomly.

Pair Corralation between Forsys Metals and Lupaka Gold

Assuming the 90 days trading horizon Forsys Metals Corp is expected to under-perform the Lupaka Gold. But the stock apears to be less risky and, when comparing its historical volatility, Forsys Metals Corp is 1.28 times less risky than Lupaka Gold. The stock trades about -0.12 of its potential returns per unit of risk. The Lupaka Gold Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Lupaka Gold Corp on December 4, 2024 and sell it today you would lose (2.00) from holding Lupaka Gold Corp or give up 28.57% of portfolio value over 90 days.

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

Forsys Metals Corp  vs.  Lupaka Gold 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. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Lupaka Gold Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lupaka Gold Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Forsys Metals and Lupaka Gold

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

The idea behind Forsys Metals Corp and Lupaka Gold Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.