Correlation Between SOI Old and Forum Energy

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

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

Diversification Opportunities for SOI Old and Forum Energy

0.23

Correlation Coefficient

SOI Old  Forum Energy

Modest diversification

The 3 months correlation between SOI and Forum is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding SOI Old 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 SOI Old 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 SOI Old 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 SOI Old i.e., SOI Old and Forum Energy go up and down completely randomly.

Pair Corralation between SOI Old and Forum Energy

Considering the 90-day investment horizon SOI Old is expected to generate 1.17 times more return on investment than Forum Energy. However, SOI Old is 1.17 times more volatile than Forum Energy Technologies. It trades about 0.03 of its potential returns per unit of risk. Forum Energy Technologies is currently generating about -0.02 per unit of risk. If you would invest  927.00  in SOI Old on October 21, 2024 and sell it today you would earn a total of  225.00  from holding SOI Old or generate 24.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	82.46%
Values	Daily Returns

SOI Old  vs.  Forum Energy Technologies

SOI Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, SOI Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Forum Energy Technologies

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 13 (%) 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 SOI Old and Forum Energy

The main advantage of trading using opposite SOI Old and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOI Old 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 SOI Old 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.