Correlation Between Thunder Mountain and Usha Resources

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

Diversification Opportunities for Thunder Mountain and Usha Resources

-0.28

Correlation Coefficient

Thunder Mountain  Usha Resources

Very good diversification

The 3 months correlation between Thunder and Usha is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Mountain Gold and Usha Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usha Resources 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 Usha Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usha Resources has no effect on the direction of Thunder Mountain i.e., Thunder Mountain and Usha Resources go up and down completely randomly.

Pair Corralation between Thunder Mountain and Usha Resources

Given the investment horizon of 90 days Thunder Mountain Gold is expected to generate 0.94 times more return on investment than Usha Resources. However, Thunder Mountain Gold is 1.06 times less risky than Usha Resources. It trades about 0.05 of its potential returns per unit of risk. Usha Resources is currently generating about -0.08 per unit of risk. If you would invest  9.50  in Thunder Mountain Gold on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Thunder Mountain Gold or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Thunder Mountain Gold  vs.  Usha Resources

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.

Usha Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usha Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Thunder Mountain and Usha Resources

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

The idea behind Thunder Mountain Gold and Usha 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.