Correlation Between Induction Healthcare and Thor Mining
Can any of the company-specific risk be diversified away by investing in both Induction Healthcare 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 Induction Healthcare and Thor Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Induction Healthcare Group and Thor Mining PLC, you can compare the effects of market volatilities on Induction Healthcare 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 Induction Healthcare with a short position of Thor Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Induction Healthcare and Thor Mining.
Diversification Opportunities for Induction Healthcare and Thor Mining
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Induction and Thor is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group 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 Induction Healthcare 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 Induction Healthcare Group 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 Induction Healthcare i.e., Induction Healthcare and Thor Mining go up and down completely randomly.
Pair Corralation between Induction Healthcare and Thor Mining
Assuming the 90 days trading horizon Induction Healthcare Group is expected to generate 1.02 times more return on investment than Thor Mining. However, Induction Healthcare is 1.02 times more volatile than Thor Mining PLC. It trades about -0.03 of its potential returns per unit of risk. Thor Mining PLC is currently generating about -0.05 per unit of risk. If you would invest 2,100 in Induction Healthcare Group on September 12, 2024 and sell it today you would lose (1,200) from holding Induction Healthcare Group or give up 57.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Induction Healthcare Group vs. Thor Mining PLC
Performance |
| Timeline |
| Induction Healthcare |
| Thor Mining PLC |
Induction Healthcare and Thor Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Induction Healthcare and Thor Mining
The main advantage of trading using opposite Induction Healthcare and Thor Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Induction Healthcare 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.| Induction Healthcare vs. Mulberry Group PLC | Induction Healthcare vs. Ikigai Ventures | Induction Healthcare vs. Neometals | Induction Healthcare vs. Coor Service Management |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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