Correlation Between Midnight Sun and Foraco International

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Can any of the company-specific risk be diversified away by investing in both Midnight Sun and Foraco International 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 Midnight Sun and Foraco International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Midnight Sun Mining and Foraco International SA, you can compare the effects of market volatilities on Midnight Sun and Foraco International 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 Midnight Sun with a short position of Foraco International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midnight Sun and Foraco International.

Diversification Opportunities for Midnight Sun and Foraco International

0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Midnight and Foraco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Midnight Sun Mining and Foraco International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foraco International and Midnight Sun 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 Midnight Sun Mining are associated (or correlated) with Foraco International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foraco International has no effect on the direction of Midnight Sun i.e., Midnight Sun and Foraco International go up and down completely randomly.

Pair Corralation between Midnight Sun and Foraco International

Assuming the 90 days horizon Midnight Sun Mining is expected to generate 2.04 times more return on investment than Foraco International. However, Midnight Sun is 2.04 times more volatile than Foraco International SA. It trades about 0.09 of its potential returns per unit of risk. Foraco International SA is currently generating about 0.08 per unit of risk. If you would invest  34.00  in Midnight Sun Mining on September 17, 2024 and sell it today you would earn a total of  9.00  from holding Midnight Sun Mining or generate 26.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Midnight Sun Mining  vs.  Foraco International SA

 Performance 
       Timeline  
Midnight Sun Mining 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Midnight Sun Mining are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Midnight Sun showed solid returns over the last few months and may actually be approaching a breakup point.
Foraco International 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Foraco International SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Foraco International displayed solid returns over the last few months and may actually be approaching a breakup point.

Midnight Sun and Foraco International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Midnight Sun and Foraco International

The main advantage of trading using opposite Midnight Sun and Foraco International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Midnight Sun position performs unexpectedly, Foraco International 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 Foraco International will offset losses from the drop in Foraco International's long position.
The idea behind Midnight Sun Mining and Foraco International SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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