Correlation Between Thor Mining and Universal Health

Can any of the company-specific risk be diversified away by investing in both Thor Mining and Universal Health 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 Thor Mining and Universal Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thor Mining PLC and Universal Health Services, you can compare the effects of market volatilities on Thor Mining and Universal Health 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 Thor Mining with a short position of Universal Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Mining and Universal Health.

Diversification Opportunities for Thor Mining and Universal Health

0.64

Correlation Coefficient

Thor Mining  Universal Health

Poor diversification

The 3 months correlation between Thor and Universal is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC and Universal Health Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Health Services and Thor Mining 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 Thor Mining PLC are associated (or correlated) with Universal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Health Services has no effect on the direction of Thor Mining i.e., Thor Mining and Universal Health go up and down completely randomly.

Pair Corralation between Thor Mining and Universal Health

Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the Universal Health. In addition to that, Thor Mining is 1.99 times more volatile than Universal Health Services. It trades about -0.14 of its total potential returns per unit of risk. Universal Health Services is currently generating about 0.17 per unit of volatility. If you would invest  18,122  in Universal Health Services on October 25, 2024 and sell it today you would earn a total of  670.00  from holding Universal Health Services or generate 3.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.47%
Values	Daily Returns

Thor Mining PLC  vs.  Universal Health Services

Thor Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Mining PLC 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Universal Health Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Health Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Thor Mining and Universal Health

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

The idea behind Thor Mining PLC and Universal Health Services 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.