Correlation Between Thor Mining and JD Sports

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

Diversification Opportunities for Thor Mining and JD Sports

0.75

Correlation Coefficient

Thor Mining  JD Sports

Poor diversification

The 3 months correlation between Thor and JD Sports is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Thor Mining i.e., Thor Mining and JD Sports go up and down completely randomly.

Pair Corralation between Thor Mining and JD Sports

Assuming the 90 days trading horizon Thor Mining PLC is expected to generate 1.37 times more return on investment than JD Sports. However, Thor Mining is 1.37 times more volatile than JD Sports Fashion. It trades about -0.06 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.23 per unit of risk. If you would invest  80.00  in Thor Mining PLC on October 24, 2024 and sell it today you would lose (15.00) from holding Thor Mining PLC or give up 18.75% of portfolio value over 90 days.

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

Thor Mining PLC  vs.  JD Sports Fashion

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.

JD Sports Fashion

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD Sports Fashion has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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.

Pair Trading with Thor Mining and JD Sports

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

The idea behind Thor Mining PLC and JD Sports Fashion 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.