Correlation Between SPoT Coffee and Themac Resources

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

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

Diversification Opportunities for SPoT Coffee and Themac Resources

0.0

Correlation Coefficient

SPoT Coffee  Themac Resources

Pay attention - limited upside

The 3 months correlation between SPoT and Themac is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SPoT Coffee and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and SPoT Coffee 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 SPoT Coffee 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 SPoT Coffee i.e., SPoT Coffee and Themac Resources go up and down completely randomly.

Pair Corralation between SPoT Coffee and Themac Resources

If you would invest  3.50  in Themac Resources Group on December 21, 2024 and sell it today you would earn a total of  7.50  from holding Themac Resources Group or generate 214.29% return on investment over 90 days.

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

SPoT Coffee  vs.  Themac Resources Group

SPoT Coffee

Risk-Adjusted Performance

Very Weak

Over the last 90 days SPoT Coffee has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SPoT Coffee is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Themac Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 14 (%) 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 SPoT Coffee and Themac Resources

The main advantage of trading using opposite SPoT Coffee and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPoT Coffee 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 SPoT Coffee 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.