Correlation Between Thunder Mountain and Leocor Gold

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

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

Diversification Opportunities for Thunder Mountain and Leocor Gold

0.45

Correlation Coefficient

Thunder Mountain  Leocor Gold

Very weak diversification

The 3 months correlation between Thunder and Leocor is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Mountain Gold and Leocor Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leocor Gold and Thunder Mountain 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 Thunder Mountain Gold are associated (or correlated) with Leocor Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leocor Gold has no effect on the direction of Thunder Mountain i.e., Thunder Mountain and Leocor Gold go up and down completely randomly.

Pair Corralation between Thunder Mountain and Leocor Gold

Given the investment horizon of 90 days Thunder Mountain is expected to generate 1.06 times less return on investment than Leocor Gold. In addition to that, Thunder Mountain is 1.21 times more volatile than Leocor Gold. It trades about 0.16 of its total potential returns per unit of risk. Leocor Gold is currently generating about 0.21 per unit of volatility. If you would invest  3.00  in Leocor Gold on August 31, 2024 and sell it today you would earn a total of  6.58  from holding Leocor Gold or generate 219.33% return on investment over 90 days.

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

Thunder Mountain Gold  vs.  Leocor Gold

Thunder Mountain Gold

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thunder Mountain Gold are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating primary indicators, Thunder Mountain reported solid returns over the last few months and may actually be approaching a breakup point.

Leocor Gold

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Leocor Gold are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Leocor Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thunder Mountain and Leocor Gold

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

The idea behind Thunder Mountain Gold and Leocor Gold 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.