Correlation Between Thor Mining and BW Offshore

Can any of the company-specific risk be diversified away by investing in both Thor Mining and BW Offshore 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 BW Offshore 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 BW Offshore, you can compare the effects of market volatilities on Thor Mining and BW Offshore 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 BW Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Mining and BW Offshore.

Diversification Opportunities for Thor Mining and BW Offshore

-0.19

Correlation Coefficient

Thor Mining  BW Offshore

Good diversification

The 3 months correlation between Thor and 0RKH is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC and BW Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW Offshore 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 BW Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW Offshore has no effect on the direction of Thor Mining i.e., Thor Mining and BW Offshore go up and down completely randomly.

Pair Corralation between Thor Mining and BW Offshore

Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the BW Offshore. In addition to that, Thor Mining is 1.88 times more volatile than BW Offshore. It trades about -0.02 of its total potential returns per unit of risk. BW Offshore is currently generating about 0.09 per unit of volatility. If you would invest  2,624  in BW Offshore on December 21, 2024 and sell it today you would earn a total of  334.00  from holding BW Offshore or generate 12.73% return on investment over 90 days.

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

Thor Mining PLC  vs.  BW Offshore

Thor Mining PLC

Risk-Adjusted Performance

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

BW Offshore

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BW Offshore are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BW Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thor Mining and BW Offshore

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

The idea behind Thor Mining PLC and BW Offshore 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.