Correlation Between Peak Minerals and Forsys Metals

Can any of the company-specific risk be diversified away by investing in both Peak Minerals and Forsys Metals 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 Peak Minerals and Forsys Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Peak Minerals Limited and Forsys Metals Corp, you can compare the effects of market volatilities on Peak Minerals and Forsys Metals 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 Peak Minerals with a short position of Forsys Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Peak Minerals and Forsys Metals.

Diversification Opportunities for Peak Minerals and Forsys Metals

-0.39

Correlation Coefficient

Peak Minerals  Forsys Metals

Very good diversification

The 3 months correlation between Peak and Forsys is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Peak Minerals Limited and Forsys Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forsys Metals Corp and Peak Minerals 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 Peak Minerals Limited are associated (or correlated) with Forsys Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forsys Metals Corp has no effect on the direction of Peak Minerals i.e., Peak Minerals and Forsys Metals go up and down completely randomly.

Pair Corralation between Peak Minerals and Forsys Metals

Assuming the 90 days horizon Peak Minerals Limited is expected to generate 3.49 times more return on investment than Forsys Metals. However, Peak Minerals is 3.49 times more volatile than Forsys Metals Corp. It trades about 0.2 of its potential returns per unit of risk. Forsys Metals Corp is currently generating about -0.03 per unit of risk. If you would invest  0.20  in Peak Minerals Limited on October 26, 2024 and sell it today you would earn a total of  0.50  from holding Peak Minerals Limited or generate 250.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Peak Minerals Limited  vs.  Forsys Metals Corp

Peak Minerals Limited

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Peak Minerals Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Peak Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Peak Minerals and Forsys Metals

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

The idea behind Peak Minerals Limited and Forsys Metals 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.