Correlation Between Thunderstruck Resources and Aston Bay

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

By analyzing existing cross correlation between Thunderstruck Resources and Aston Bay Holdings, you can compare the effects of market volatilities on Thunderstruck Resources and Aston Bay 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 Thunderstruck Resources with a short position of Aston Bay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunderstruck Resources and Aston Bay.

Diversification Opportunities for Thunderstruck Resources and Aston Bay

-0.37

Correlation Coefficient

Thunderstruck Resources  Aston Bay

Very good diversification

The 3 months correlation between Thunderstruck and Aston is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Thunderstruck Resources and Aston Bay Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Bay Holdings and Thunderstruck Resources 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 Thunderstruck Resources are associated (or correlated) with Aston Bay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Bay Holdings has no effect on the direction of Thunderstruck Resources i.e., Thunderstruck Resources and Aston Bay go up and down completely randomly.

Pair Corralation between Thunderstruck Resources and Aston Bay

Assuming the 90 days horizon Thunderstruck Resources is expected to generate 1.38 times more return on investment than Aston Bay. However, Thunderstruck Resources is 1.38 times more volatile than Aston Bay Holdings. It trades about 0.08 of its potential returns per unit of risk. Aston Bay Holdings is currently generating about -0.12 per unit of risk. If you would invest  4.50  in Thunderstruck Resources on September 16, 2024 and sell it today you would earn a total of  1.00  from holding Thunderstruck Resources or generate 22.22% return on investment over 90 days.

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

Thunderstruck Resources  vs.  Aston Bay Holdings

Thunderstruck Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thunderstruck Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Thunderstruck Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Aston Bay Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aston Bay Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Thunderstruck Resources and Aston Bay

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

The idea behind Thunderstruck Resources and Aston Bay Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.