Correlation Between Thor Mining and Dotdigital Group

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

Diversification Opportunities for Thor Mining and Dotdigital Group

-0.19

Correlation Coefficient

Thor Mining  Dotdigital Group

Good diversification

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

Pair Corralation between Thor Mining and Dotdigital Group

Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the Dotdigital Group. In addition to that, Thor Mining is 1.51 times more volatile than Dotdigital Group Plc. It trades about -0.04 of its total potential returns per unit of risk. Dotdigital Group Plc is currently generating about 0.06 per unit of volatility. If you would invest  8,700  in Dotdigital Group Plc on September 14, 2024 and sell it today you would earn a total of  660.00  from holding Dotdigital Group Plc or generate 7.59% 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.  Dotdigital Group Plc

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 latest uncertain 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.

Dotdigital Group Plc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dotdigital Group Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dotdigital Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thor Mining and Dotdigital Group

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

The idea behind Thor Mining PLC and Dotdigital Group Plc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.