Correlation Between Hemisphere Energy and FORWARD AIR

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

By analyzing existing cross correlation between Hemisphere Energy Corp and FORWARD AIR P, you can compare the effects of market volatilities on Hemisphere Energy and FORWARD AIR 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 Hemisphere Energy with a short position of FORWARD AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hemisphere Energy and FORWARD AIR.

Diversification Opportunities for Hemisphere Energy and FORWARD AIR

-0.11

Correlation Coefficient

Hemisphere Energy  FORWARD AIR

Good diversification

The 3 months correlation between Hemisphere and FORWARD is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp and FORWARD AIR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FORWARD AIR P and Hemisphere Energy 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 Hemisphere Energy Corp are associated (or correlated) with FORWARD AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FORWARD AIR P has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and FORWARD AIR go up and down completely randomly.

Pair Corralation between Hemisphere Energy and FORWARD AIR

Assuming the 90 days trading horizon Hemisphere Energy Corp is expected to generate 0.25 times more return on investment than FORWARD AIR. However, Hemisphere Energy Corp is 4.02 times less risky than FORWARD AIR. It trades about 0.07 of its potential returns per unit of risk. FORWARD AIR P is currently generating about 0.0 per unit of risk. If you would invest  118.00  in Hemisphere Energy Corp on October 27, 2024 and sell it today you would earn a total of  5.00  from holding Hemisphere Energy Corp or generate 4.24% return on investment over 90 days.

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

Hemisphere Energy Corp  vs.  FORWARD AIR P

Hemisphere Energy Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hemisphere Energy is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

FORWARD AIR P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FORWARD AIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, FORWARD AIR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hemisphere Energy and FORWARD AIR

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

The idea behind Hemisphere Energy Corp and FORWARD AIR P 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.