Correlation Between Summa Silver and Forza Petroleum

Can any of the company-specific risk be diversified away by investing in both Summa Silver and Forza Petroleum 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 Summa Silver and Forza Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Summa Silver and Forza Petroleum

0.0

Correlation Coefficient

Summa Silver  Forza Petroleum

Pay attention - limited upside

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

Pair Corralation between Summa Silver and Forza Petroleum

If you would invest  20.00  in Summa Silver Corp on December 2, 2024 and sell it today you would earn a total of  3.00  from holding Summa Silver Corp or generate 15.0% return on investment over 90 days.

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

Summa Silver Corp  vs.  Forza Petroleum Limited

Summa Silver Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Summa Silver reported solid returns over the last few months and may actually be approaching a breakup point.

Forza Petroleum

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Summa Silver and Forza Petroleum

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

The idea behind Summa Silver Corp and Forza Petroleum Limited 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.