Correlation Between Thorney Technologies and Leeuwin Metals

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

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

Diversification Opportunities for Thorney Technologies and Leeuwin Metals

0.15

Correlation Coefficient

Thorney Technologies  Leeuwin Metals

Average diversification

The 3 months correlation between Thorney and Leeuwin is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Thorney Technologies and Leeuwin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leeuwin Metals and Thorney Technologies 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 Thorney Technologies are associated (or correlated) with Leeuwin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leeuwin Metals has no effect on the direction of Thorney Technologies i.e., Thorney Technologies and Leeuwin Metals go up and down completely randomly.

Pair Corralation between Thorney Technologies and Leeuwin Metals

Assuming the 90 days trading horizon Thorney Technologies is expected to generate 2.21 times less return on investment than Leeuwin Metals. In addition to that, Thorney Technologies is 1.09 times more volatile than Leeuwin Metals. It trades about 0.03 of its total potential returns per unit of risk. Leeuwin Metals is currently generating about 0.08 per unit of volatility. If you would invest  4.50  in Leeuwin Metals on September 21, 2024 and sell it today you would earn a total of  1.50  from holding Leeuwin Metals or generate 33.33% return on investment over 90 days.

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

Thorney Technologies  vs.  Leeuwin Metals

Thorney Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thorney Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Thorney Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Leeuwin Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leeuwin Metals 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 basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Thorney Technologies and Leeuwin Metals

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

The idea behind Thorney Technologies and Leeuwin Metals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.