Correlation Between Thye Ming and CHC Resources

Can any of the company-specific risk be diversified away by investing in both Thye Ming and CHC Resources 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 Thye Ming and CHC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thye Ming Industrial and CHC Resources Corp, you can compare the effects of market volatilities on Thye Ming and CHC Resources 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 Thye Ming with a short position of CHC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thye Ming and CHC Resources.

Diversification Opportunities for Thye Ming and CHC Resources

0.85

Correlation Coefficient

Thye Ming  CHC Resources

Very poor diversification

The 3 months correlation between Thye and CHC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Thye Ming Industrial and CHC Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHC Resources Corp and Thye Ming 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 Thye Ming Industrial are associated (or correlated) with CHC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHC Resources Corp has no effect on the direction of Thye Ming i.e., Thye Ming and CHC Resources go up and down completely randomly.

Pair Corralation between Thye Ming and CHC Resources

Assuming the 90 days trading horizon Thye Ming Industrial is expected to generate 1.47 times more return on investment than CHC Resources. However, Thye Ming is 1.47 times more volatile than CHC Resources Corp. It trades about 0.41 of its potential returns per unit of risk. CHC Resources Corp is currently generating about 0.21 per unit of risk. If you would invest  6,300  in Thye Ming Industrial on December 21, 2024 and sell it today you would earn a total of  1,210  from holding Thye Ming Industrial or generate 19.21% return on investment over 90 days.

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

Thye Ming Industrial  vs.  CHC Resources Corp

Thye Ming Industrial

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Thye Ming Industrial are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thye Ming showed solid returns over the last few months and may actually be approaching a breakup point.

CHC Resources Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CHC Resources Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CHC Resources may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thye Ming and CHC Resources

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

The idea behind Thye Ming Industrial and CHC Resources Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.