Correlation Between Themac Resources and Torq Resources

Can any of the company-specific risk be diversified away by investing in both Themac Resources and Torq 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 Themac Resources and Torq Resources 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 Torq Resources, you can compare the effects of market volatilities on Themac Resources and Torq 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 Themac Resources with a short position of Torq Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Themac Resources and Torq Resources.

Diversification Opportunities for Themac Resources and Torq Resources

0.27

Correlation Coefficient

Themac Resources  Torq Resources

Modest diversification

The 3 months correlation between Themac and Torq is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Themac Resources Group and Torq Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torq Resources 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 Torq Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torq Resources has no effect on the direction of Themac Resources i.e., Themac Resources and Torq Resources go up and down completely randomly.

Pair Corralation between Themac Resources and Torq Resources

Assuming the 90 days horizon Themac Resources Group is expected to under-perform the Torq Resources. In addition to that, Themac Resources is 1.27 times more volatile than Torq Resources. It trades about -0.09 of its total potential returns per unit of risk. Torq Resources is currently generating about -0.05 per unit of volatility. If you would invest  8.00  in Torq Resources on September 5, 2024 and sell it today you would lose (1.00) from holding Torq Resources or give up 12.5% of portfolio value over 90 days.

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

Themac Resources Group  vs.  Torq Resources

Themac Resources

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Torq Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Torq Resources are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Torq Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Themac Resources and Torq Resources

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

The idea behind Themac Resources Group and Torq Resources 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.