Correlation Between Thor Mining and Halfords Group
Can any of the company-specific risk be diversified away by investing in both Thor Mining and Halfords Group 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 Thor Mining and Halfords Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thor Mining PLC and Halfords Group PLC, you can compare the effects of market volatilities on Thor Mining and Halfords Group 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 Thor Mining with a short position of Halfords Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Mining and Halfords Group.
Diversification Opportunities for Thor Mining and Halfords Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thor and Halfords is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC and Halfords Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halfords Group PLC and Thor Mining 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 Thor Mining PLC are associated (or correlated) with Halfords Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halfords Group PLC has no effect on the direction of Thor Mining i.e., Thor Mining and Halfords Group go up and down completely randomly.
Pair Corralation between Thor Mining and Halfords Group
Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the Halfords Group. In addition to that, Thor Mining is 1.45 times more volatile than Halfords Group PLC. It trades about -0.14 of its total potential returns per unit of risk. Halfords Group PLC is currently generating about -0.16 per unit of volatility. If you would invest 13,360 in Halfords Group PLC on October 25, 2024 and sell it today you would lose (760.00) from holding Halfords Group PLC or give up 5.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thor Mining PLC vs. Halfords Group PLC
Performance |
| Timeline |
| Thor Mining PLC |
| Halfords Group PLC |
Thor Mining and Halfords Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thor Mining and Halfords Group
The main advantage of trading using opposite Thor Mining and Halfords Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Mining position performs unexpectedly, Halfords Group 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 Halfords Group will offset losses from the drop in Halfords Group's long position.| Thor Mining vs. Monster Beverage Corp | Thor Mining vs. Tyson Foods Cl | Thor Mining vs. InterContinental Hotels Group | Thor Mining vs. Young Cos Brewery |
| Halfords Group vs. Grieg Seafood | Halfords Group vs. AfriTin Mining | Halfords Group vs. Endeavour Mining Corp | Halfords Group vs. Thor Mining PLC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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