Correlation Between 88 Energy and Thor Mining

Can any of the company-specific risk be diversified away by investing in both 88 Energy 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 88 Energy and Thor Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 88 Energy and Thor Mining PLC, you can compare the effects of market volatilities on 88 Energy 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 88 Energy with a short position of Thor Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of 88 Energy and Thor Mining.

Diversification Opportunities for 88 Energy and Thor Mining

0.54

Correlation Coefficient

88 Energy  Thor Mining

Very weak diversification

The 3 months correlation between 88E and Thor is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding 88 Energy 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 88 Energy 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 88 Energy 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 88 Energy i.e., 88 Energy and Thor Mining go up and down completely randomly.

Pair Corralation between 88 Energy and Thor Mining

Assuming the 90 days trading horizon 88 Energy is expected to under-perform the Thor Mining. But the stock apears to be less risky and, when comparing its historical volatility, 88 Energy is 2.88 times less risky than Thor Mining. The stock trades about -0.19 of its potential returns per unit of risk. The Thor Mining PLC is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Thor Mining PLC on December 1, 2024 and sell it today you would lose (13.00) from holding Thor Mining PLC or give up 17.81% of portfolio value over 90 days.

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

88 Energy  vs.  Thor Mining PLC

88 Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days 88 Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Thor Mining PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thor Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with 88 Energy and Thor Mining

The main advantage of trading using opposite 88 Energy and Thor Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 88 Energy 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.

The idea behind 88 Energy and Thor Mining PLC 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.

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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.