Correlation Between Central Asia and Thor Mining
Can any of the company-specific risk be diversified away by investing in both Central Asia and Thor Mining 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 Central Asia and Thor Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and Thor Mining PLC, you can compare the effects of market volatilities on Central Asia and Thor Mining 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 Central Asia with a short position of Thor Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and Thor Mining.
Diversification Opportunities for Central Asia and Thor Mining
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Central and Thor is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and Thor Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Mining PLC and Central Asia 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 Central Asia Metals are associated (or correlated) with Thor Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Mining PLC has no effect on the direction of Central Asia i.e., Central Asia and Thor Mining go up and down completely randomly.
Pair Corralation between Central Asia and Thor Mining
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the Thor Mining. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 2.53 times less risky than Thor Mining. The stock trades about -0.28 of its potential returns per unit of risk. The Thor Mining PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Thor Mining PLC on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Thor Mining PLC or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Central Asia Metals vs. Thor Mining PLC
Performance |
| Timeline |
| Central Asia Metals |
| Thor Mining PLC |
Central Asia and Thor Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and Thor Mining
The main advantage of trading using opposite Central Asia and Thor Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, Thor Mining 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 Thor Mining will offset losses from the drop in Thor Mining's long position.| Central Asia vs. Givaudan SA | Central Asia vs. Antofagasta PLC | Central Asia vs. Centamin PLC | Central Asia vs. Atalaya Mining |
| Thor Mining vs. Givaudan SA | Thor Mining vs. Antofagasta PLC | Thor Mining vs. Centamin PLC | Thor Mining vs. Atalaya Mining |
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 the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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