Correlation Between Forum Energy and Metals Creek

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

By analyzing existing cross correlation between Forum Energy Metals and Metals Creek Resources, you can compare the effects of market volatilities on Forum Energy and Metals Creek 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 Metals Creek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forum Energy and Metals Creek.

Diversification Opportunities for Forum Energy and Metals Creek

0.07

Correlation Coefficient

Forum Energy  Metals Creek

Significant diversification

The 3 months correlation between Forum and Metals is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Forum Energy Metals and Metals Creek Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Creek Resources 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 Metals are associated (or correlated) with Metals Creek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Creek Resources has no effect on the direction of Forum Energy i.e., Forum Energy and Metals Creek go up and down completely randomly.

Pair Corralation between Forum Energy and Metals Creek

Assuming the 90 days horizon Forum Energy is expected to generate 4.29 times less return on investment than Metals Creek. But when comparing it to its historical volatility, Forum Energy Metals is 2.22 times less risky than Metals Creek. It trades about 0.06 of its potential returns per unit of risk. Metals Creek Resources is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Metals Creek Resources on May 8, 2025 and sell it today you would lose (0.16) from holding Metals Creek Resources or give up 8.0% of portfolio value over 90 days.

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

Forum Energy Metals  vs.  Metals Creek Resources

Forum Energy Metals

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Forum Energy Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Forum Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Metals Creek Resources

Risk-Adjusted Performance

Fair

Over the last 90 days Metals Creek Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak technical and fundamental indicators, Metals Creek reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forum Energy and Metals Creek

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

The idea behind Forum Energy Metals and Metals Creek Resources 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.