Correlation Between Forsys Metals and Graphite One

Can any of the company-specific risk be diversified away by investing in both Forsys Metals and Graphite One 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 Forsys Metals and Graphite One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Forsys Metals Corp and Graphite One, you can compare the effects of market volatilities on Forsys Metals and Graphite One 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 Forsys Metals with a short position of Graphite One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forsys Metals and Graphite One.

Diversification Opportunities for Forsys Metals and Graphite One

0.52

Correlation Coefficient

Forsys Metals  Graphite One

Very weak diversification

The 3 months correlation between Forsys and Graphite is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Forsys Metals Corp and Graphite One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite One and Forsys Metals 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 Forsys Metals Corp are associated (or correlated) with Graphite One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite One has no effect on the direction of Forsys Metals i.e., Forsys Metals and Graphite One go up and down completely randomly.

Pair Corralation between Forsys Metals and Graphite One

Assuming the 90 days trading horizon Forsys Metals Corp is expected to generate about the same return on investment as Graphite One. However, Forsys Metals is 1.09 times more volatile than Graphite One. It trades about 0.2 of its potential returns per unit of risk. Graphite One is currently producing about 0.22 per unit of risk. If you would invest  71.00  in Graphite One on March 4, 2024 and sell it today you would earn a total of  12.00  from holding Graphite One or generate 16.9% return on investment over 90 days.

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

Forsys Metals Corp  vs.  Graphite One

Forsys Metals Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Forsys Metals displayed solid returns over the last few months and may actually be approaching a breakup point.

Graphite One

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Graphite One are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Graphite One may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Forsys Metals and Graphite One

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

The idea behind Forsys Metals Corp and Graphite One 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.