Correlation Between Forum Energy and National Cinemedia

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Can any of the company-specific risk be diversified away by investing in both Forum Energy and National Cinemedia 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 Forum Energy and National Cinemedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Forum Energy Technologies and National Cinemedia, you can compare the effects of market volatilities on Forum Energy and National Cinemedia 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 Forum Energy with a short position of National Cinemedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and National Cinemedia.

Diversification Opportunities for Forum Energy and National Cinemedia

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Forum and National is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Technologies and National Cinemedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Cinemedia and Forum Energy 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 Forum Energy Technologies are associated (or correlated) with National Cinemedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Cinemedia has no effect on the direction of Forum Energy i.e., Forum Energy and National Cinemedia go up and down completely randomly.

Pair Corralation between Forum Energy and National Cinemedia

Considering the 90-day investment horizon Forum Energy Technologies is expected to generate 0.7 times more return on investment than National Cinemedia. However, Forum Energy Technologies is 1.43 times less risky than National Cinemedia. It trades about 0.01 of its potential returns per unit of risk. National Cinemedia is currently generating about -0.12 per unit of risk. If you would invest  2,381  in Forum Energy Technologies on July 8, 2022 and sell it today you would lose (135.00)  from holding Forum Energy Technologies or give up 5.67% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Forum Energy Technologies  vs.  National Cinemedia

 Performance (%) 
       Timeline  
Forum Energy Technologies 
Forum Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, Forum Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Forum Price Channel

National Cinemedia 
National Performance
0 of 100
Over the last 90 days National Cinemedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

National Price Channel

Forum Energy and National Cinemedia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Forum Energy and National Cinemedia

The main advantage of trading using opposite Forum Energy and National Cinemedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forum Energy position performs unexpectedly, National Cinemedia 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 National Cinemedia will offset losses from the drop in National Cinemedia's long position.
Forum Energy vs. Amazon Inc
The idea behind Forum Energy Technologies and National Cinemedia 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.
National Cinemedia vs. Amazon Inc
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 Commodity Channel Index module to use Commodity Channel Index to analyze current equity momentum.

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