Correlation Between Expro Group and Forum Energy

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

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

Diversification Opportunities for Expro Group and Forum Energy

0.62

Correlation Coefficient

Expro Group  Forum Energy

Poor diversification

The 3 months correlation between Expro and Forum is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Expro Group Holdings 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 Expro Group 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 Expro Group Holdings 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 Expro Group i.e., Expro Group and Forum Energy go up and down completely randomly.

Pair Corralation between Expro Group and Forum Energy

Given the investment horizon of 90 days Expro Group Holdings is expected to under-perform the Forum Energy. In addition to that, Expro Group is 1.25 times more volatile than Forum Energy Technologies. It trades about -0.2 of its total potential returns per unit of risk. Forum Energy Technologies is currently generating about -0.1 per unit of volatility. If you would invest  1,692  in Forum Energy Technologies on September 23, 2024 and sell it today you would lose (271.00) from holding Forum Energy Technologies or give up 16.02% of portfolio value over 90 days.

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

Expro Group Holdings  vs.  Forum Energy Technologies

Expro Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Expro Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Forum Energy Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forum Energy Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Expro Group and Forum Energy

The main advantage of trading using opposite Expro Group and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Expro Group 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 Expro Group Holdings 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.

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.