Correlation Between Therma Bright and Manganese
Can any of the company-specific risk be diversified away by investing in both Therma Bright and Manganese 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 Therma Bright and Manganese into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and Manganese X Energy, you can compare the effects of market volatilities on Therma Bright and Manganese 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 Therma Bright with a short position of Manganese. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and Manganese.
Diversification Opportunities for Therma Bright and Manganese
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Therma and Manganese is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and Manganese X Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manganese X Energy and Therma Bright 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 Therma Bright are associated (or correlated) with Manganese. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manganese X Energy has no effect on the direction of Therma Bright i.e., Therma Bright and Manganese go up and down completely randomly.
Pair Corralation between Therma Bright and Manganese
Assuming the 90 days trading horizon Therma Bright is expected to generate 2.04 times more return on investment than Manganese. However, Therma Bright is 2.04 times more volatile than Manganese X Energy. It trades about 0.06 of its potential returns per unit of risk. Manganese X Energy is currently generating about 0.01 per unit of risk. If you would invest 6.00 in Therma Bright on November 4, 2024 and sell it today you would lose (2.00) from holding Therma Bright or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Therma Bright vs. Manganese X Energy
Performance |
| Timeline |
| Therma Bright |
| Manganese X Energy |
Therma Bright and Manganese Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Therma Bright and Manganese
The main advantage of trading using opposite Therma Bright and Manganese positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright position performs unexpectedly, Manganese 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 Manganese will offset losses from the drop in Manganese's long position.| Therma Bright vs. Premium Income | Therma Bright vs. E L Financial Corp | Therma Bright vs. Fairfax Financial Holdings | Therma Bright vs. Fairfax Financial Holdings |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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