Correlation Between Forsys Metals and Converge Technology

Can any of the company-specific risk be diversified away by investing in both Forsys Metals and Converge Technology 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 Converge Technology 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 Converge Technology Solutions, you can compare the effects of market volatilities on Forsys Metals and Converge Technology 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 Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forsys Metals and Converge Technology.

Diversification Opportunities for Forsys Metals and Converge Technology

0.0

Correlation Coefficient

Forsys Metals  Converge Technology

Pay attention - limited upside

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

Pair Corralation between Forsys Metals and Converge Technology

Assuming the 90 days trading horizon Forsys Metals Corp is expected to generate 1.39 times more return on investment than Converge Technology. However, Forsys Metals is 1.39 times more volatile than Converge Technology Solutions. It trades about 0.08 of its potential returns per unit of risk. Converge Technology Solutions is currently generating about -0.09 per unit of risk. If you would invest  55.00  in Forsys Metals Corp on August 31, 2024 and sell it today you would earn a total of  12.00  from holding Forsys Metals Corp or generate 21.82% return on investment over 90 days.

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

Forsys Metals Corp  vs.  Converge Technology Solutions

Forsys Metals Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Forsys Metals Corp are ranked lower than 6 (%) 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.

Converge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Converge Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Forsys Metals and Converge Technology

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

The idea behind Forsys Metals Corp and Converge Technology Solutions 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.