Correlation Between Independence Contract and Forum Energy

Can any of the company-specific risk be diversified away by investing in both Independence Contract and Forum Energy 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 Independence Contract and Forum Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Independence Contract Drilling and Forum Energy Technologies, you can compare the effects of market volatilities on Independence Contract and Forum Energy 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 Independence Contract with a short position of Forum Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Independence Contract and Forum Energy.

Diversification Opportunities for Independence Contract and Forum Energy

0.0

Correlation Coefficient

Independence Contract  Forum Energy

Pay attention - limited upside

The 3 months correlation between Independence and Forum is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Independence Contract Drilling and Forum Energy Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forum Energy Technologies and Independence Contract 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 Independence Contract Drilling are associated (or correlated) with Forum Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forum Energy Technologies has no effect on the direction of Independence Contract i.e., Independence Contract and Forum Energy go up and down completely randomly.

Pair Corralation between Independence Contract and Forum Energy

If you would invest (100.00) in Independence Contract Drilling on December 2, 2024 and sell it today you would earn a total of  100.00  from holding Independence Contract Drilling or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Independence Contract Drilling  vs.  Forum Energy Technologies

Independence Contract

Risk-Adjusted Performance

Very Weak

Over the last 90 days Independence Contract Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Independence Contract is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Forum Energy Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Forum Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Independence Contract and Forum Energy

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

The idea behind Independence Contract Drilling and Forum Energy Technologies 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.