Correlation Between ExGen Resources and Themac Resources

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

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

Diversification Opportunities for ExGen Resources and Themac Resources

0.47

Correlation Coefficient

ExGen Resources  Themac Resources

Very weak diversification

The 3 months correlation between ExGen and Themac is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding ExGen Resources and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and ExGen 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 ExGen Resources are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of ExGen Resources i.e., ExGen Resources and Themac Resources go up and down completely randomly.

Pair Corralation between ExGen Resources and Themac Resources

Assuming the 90 days horizon ExGen Resources is expected to generate 1.29 times less return on investment than Themac Resources. In addition to that, ExGen Resources is 1.72 times more volatile than Themac Resources Group. It trades about 0.11 of its total potential returns per unit of risk. Themac Resources Group is currently generating about 0.24 per unit of volatility. If you would invest  2.50  in Themac Resources Group on September 24, 2024 and sell it today you would earn a total of  1.00  from holding Themac Resources Group or generate 40.0% return on investment over 90 days.

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

ExGen Resources  vs.  Themac Resources Group

ExGen Resources

Risk-Adjusted Performance

6 of 100

Modest

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

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with ExGen Resources and Themac Resources

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

The idea behind ExGen Resources and Themac Resources Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.