Correlation Between Themac Resources and Plato Gold

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

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

Diversification Opportunities for Themac Resources and Plato Gold

0.23

Correlation Coefficient

Themac Resources  Plato Gold

Modest diversification

The 3 months correlation between Themac and Plato is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Themac Resources Group and Plato Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plato Gold Corp and Themac 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 Themac Resources Group are associated (or correlated) with Plato Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plato Gold Corp has no effect on the direction of Themac Resources i.e., Themac Resources and Plato Gold go up and down completely randomly.

Pair Corralation between Themac Resources and Plato Gold

Assuming the 90 days horizon Themac Resources is expected to generate 1.87 times less return on investment than Plato Gold. But when comparing it to its historical volatility, Themac Resources Group is 2.96 times less risky than Plato Gold. It trades about 0.23 of its potential returns per unit of risk. Plato Gold Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Plato Gold Corp on September 23, 2024 and sell it today you would earn a total of  0.50  from holding Plato Gold Corp or generate 25.0% return on investment over 90 days.

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

Themac Resources Group  vs.  Plato Gold Corp

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.

Plato Gold Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Plato Gold Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Plato Gold showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Themac Resources and Plato Gold

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

The idea behind Themac Resources Group and Plato Gold 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.