Correlation Between Gear4music (Holdings) and Thor Mining

Can any of the company-specific risk be diversified away by investing in both Gear4music (Holdings) 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 Gear4music (Holdings) and Thor Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gear4music Plc and Thor Mining PLC, you can compare the effects of market volatilities on Gear4music (Holdings) 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 Gear4music (Holdings) with a short position of Thor Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gear4music (Holdings) and Thor Mining.

Diversification Opportunities for Gear4music (Holdings) and Thor Mining

0.77

Correlation Coefficient

Gear4music (Holdings)  Thor Mining

Poor diversification

The 3 months correlation between Gear4music and Thor is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Gear4music Plc 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 Gear4music (Holdings) 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 Gear4music Plc 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 Gear4music (Holdings) i.e., Gear4music (Holdings) and Thor Mining go up and down completely randomly.

Pair Corralation between Gear4music (Holdings) and Thor Mining

Assuming the 90 days trading horizon Gear4music Plc is expected to under-perform the Thor Mining. But the stock apears to be less risky and, when comparing its historical volatility, Gear4music Plc is 3.76 times less risky than Thor Mining. The stock trades about -0.23 of its potential returns per unit of risk. The Thor Mining PLC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Thor Mining PLC on December 30, 2024 and sell it today you would lose (13.00) from holding Thor Mining PLC or give up 18.57% of portfolio value over 90 days.

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

Gear4music Plc  vs.  Thor Mining PLC

Gear4music (Holdings)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gear4music Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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 uncertain 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 Gear4music (Holdings) and Thor Mining

The main advantage of trading using opposite Gear4music (Holdings) and Thor Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gear4music (Holdings) 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 Gear4music Plc 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.

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 CEOs Directory module to screen CEOs from public companies around the world.