Correlation Between Enerflex and Forum Energy

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

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

Diversification Opportunities for Enerflex and Forum Energy

-0.46

Correlation Coefficient

Enerflex  Forum Energy

Very good diversification

The 3 months correlation between Enerflex and Forum is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Enerflex 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 Enerflex 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 Enerflex 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 Enerflex i.e., Enerflex and Forum Energy go up and down completely randomly.

Pair Corralation between Enerflex and Forum Energy

Given the investment horizon of 90 days Enerflex is expected to generate 0.94 times more return on investment than Forum Energy. However, Enerflex is 1.06 times less risky than Forum Energy. It trades about 0.47 of its potential returns per unit of risk. Forum Energy Technologies is currently generating about -0.11 per unit of risk. If you would invest  576.00  in Enerflex on August 21, 2024 and sell it today you would earn a total of  302.00  from holding Enerflex or generate 52.43% return on investment over 90 days.

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

Enerflex  vs.  Forum Energy Technologies

Enerflex

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Enerflex are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Enerflex unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Enerflex and Forum Energy

The main advantage of trading using opposite Enerflex and Forum Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerflex 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 Enerflex 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.