Correlation Between Thunder Tiger and Bonny Worldwide

Can any of the company-specific risk be diversified away by investing in both Thunder Tiger and Bonny Worldwide 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 Thunder Tiger and Bonny Worldwide into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thunder Tiger Corp and Bonny Worldwide, you can compare the effects of market volatilities on Thunder Tiger and Bonny Worldwide 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 Thunder Tiger with a short position of Bonny Worldwide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunder Tiger and Bonny Worldwide.

Diversification Opportunities for Thunder Tiger and Bonny Worldwide

0.27

Correlation Coefficient

Thunder Tiger  Bonny Worldwide

Modest diversification

The 3 months correlation between Thunder and Bonny is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Tiger Corp and Bonny Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonny Worldwide and Thunder Tiger 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 Thunder Tiger Corp are associated (or correlated) with Bonny Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonny Worldwide has no effect on the direction of Thunder Tiger i.e., Thunder Tiger and Bonny Worldwide go up and down completely randomly.

Pair Corralation between Thunder Tiger and Bonny Worldwide

Assuming the 90 days trading horizon Thunder Tiger is expected to generate 3.48 times less return on investment than Bonny Worldwide. But when comparing it to its historical volatility, Thunder Tiger Corp is 1.12 times less risky than Bonny Worldwide. It trades about 0.04 of its potential returns per unit of risk. Bonny Worldwide is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,630  in Bonny Worldwide on October 10, 2024 and sell it today you would earn a total of  24,270  from holding Bonny Worldwide or generate 431.08% return on investment over 90 days.

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

Thunder Tiger Corp  vs.  Bonny Worldwide

Thunder Tiger Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Tiger Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thunder Tiger showed solid returns over the last few months and may actually be approaching a breakup point.

Bonny Worldwide

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonny Worldwide are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Bonny Worldwide showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thunder Tiger and Bonny Worldwide

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

The idea behind Thunder Tiger Corp and Bonny Worldwide 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.